High-Speed Trading Changing Stock Market

 　　Wall Street analysts¹ searching for reasons for the U.S. stock market's sharp swings in early August point to high unemployment, the European debt crisis and other basic economic problems. But some also suspect what is known as high-frequency trading, computerized trades that happen in milliseconds.

　　The stock market used to be a human scene of men shouting price quotes and making trades on the floor of the New York Stock Exchange. Now it is high-speed computers, operating according to complex mathematical formulas, that run the show.

　　Using automated³ trading strategies, computer programs bid, buy and sell thousands of times a second, garnering⁴ profits of a penny or less per trade: small change that adds up to millions in profits each day, and billions each year.

　　Some Wall Street analysts suspect that high-frequency trading, as it is called, is also partly responsible for recent sharp swings in the market of hundreds of points in a single day. They say that although such volatility⁵ is likely a reflection of basic economic problems, the swings may be amplified⁶ by a trading time range of thousandths - or even millionths - of a second.

　　In a recent analysis of Standard & Poor's 500-stock market index since 1962, The New York Times found that large price swings of three or four percent, have happened far more frequently in the last 10 years than in the preceding 40.

　　Joe Saluzzi, co-head of equity⁷ trading at Themis Trading in New Jersey⁸, says that the scene today on the floors of the stock exchanges is akin² to a historical exhibit.

　　"It's no longer what you see on TV, guys with colored jackets running around the floor," Saluzzi says. "That's the show, that's the TV studio. The equity market now is a bunch of co-located computers strung together by a bunch of wires, everyone trying to race to zero. The speed of light is the goal, the speed of light is what we're looking at now."

　　These "co-located" computers, Saluzzi explains, are banks of servers placed as close as possible to broker⁹ and exchange company offices. The reason for such proximity¹⁰ is to minimize the time that data spends traveling - at nearly the speed of light - along fiber-optic lines. Receiving and evaluating information almost instantaneously in a dynamic feedback loop, the computers float, revise, complete and cancel trades - all based on what other high-frequency trading programs may be about to do, or have just done.

　　"A millisecond can mean millions of dollars to the success of your strategy," explains Andrew Haines, chief information officer of online trading broker Gain Capital. "Having a one, two, three-millisecond advantage over other traders may mean that you get into a trade at a preferable price."

　　Such trade has exploded over the last 10 years, and now accounts for an estimated 70 percent of all stock trades in the U.S.

　　But it also has raised controversy¹¹. Some critics say that the fastest computer trading companies have an unfair advantage in being able to detect price moves a millisecond before other traders, giving them an edge in responding just as quickly with a buy, sell or cancel order. They say that such hyper-fast trading distorts the market.

　　Other analysts respond, however, that the advantage has always been with traders who are quickest to gather and act upon changing market conditions, and that automated trading strategies are only the latest - and likely the ultimate - example of that.

　　The issue that has received most attention, however, is speed trading's implication in runaway¹² market swings, like the one that took place on May 6, 2010. In less than half an hour, the Dow Jones Industrial Average dropped more than 600 points and then shot part of the way back up again, recovering much of its losses. Following that wild ride, the Securities and Exchange Commission (SEC) ordered preventative measures called "circuit-breakers."

　　"Basically, what they mean is that when a stock has moved by a large amount in a short period of time, there's a trading halt," says Joel Hasbrouck, a professor at New York University's Stern School of Business. He thinks the circuit breaker system is working to prevent extreme swings, but says that the SEC needs to implement¹³ ongoing¹⁴ tracking of market moves. At present, he says, the SEC has no means for detecting potential abuses, such as attempts to drive a price in a particular direction in order to capitalize on it.

　　But Joe Saluzzi at Themis Trading contends that the core problem is an "unbalanced" market, one that is overly dominated by speed-trading that looks only as far ahead as the next millisecond. He says the result is that stock prices lose any connection to reality outside the financial markets, to a company's real-world value.

　　"The stock market used to be a predictor of the future economy," Saluzzi notes.  "Now I think the stock market is a backwards¹⁵ predictor. It doesn't tell you, it's not forecasting. It's forecasting the next microsecond move. It's not forecasting the next six months, because most of the volume is being dominated by guys who could care less what goes on in six months. So, how could you think the price is being set correctly?"

　　Yet Joel Hasbrouck of NYU observes that speed trading often reduces volatility.  "In normal circumstances, high-frequency traders act as market makers¹⁶," Hasbrouck says. "That is, they stand by passively waiting to buy or sell from whoever comes into the market needing to trade. In that capacity, they actually help stabilize¹⁷ the market."

　　The difference, Saluzzi notes, is that unlike market makers, high-frequency traders are free to leave the market, declining to buy or sell. Such sudden withdrawals¹⁸ by the major players create vacuums in which prices fall or shoot up dramatically in seconds. That's one reason why most observers say that more reform is needed to guard against instability and other dangers in this brave new world of trading.

1 analysts   

分析家，化验员( analyst的名词复数 )

参考例句：

• City analysts forecast huge profits this year. 伦敦金融分析家预测今年的利润非常丰厚。
• I was impressed by the high calibre of the researchers and analysts. 研究人员和分析人员的高素质给我留下了深刻印象。

2 akin   

adj.同族的，类似的

参考例句：

• She painted flowers and birds pictures akin to those of earlier feminine painters.她画一些同早期女画家类似的花鸟画。
• Listening to his life story is akin to reading a good adventure novel.听他的人生故事犹如阅读一本精彩的冒险小说。

3 automated   

a.自动化的

参考例句：

• The entire manufacturing process has been automated. 整个生产过程已自动化。
• Automated Highway System (AHS) is recently regarded as one subsystem of Intelligent Transport System (ITS). 近年来自动公路系统(Automated Highway System,AHS)，作为智能运输系统的子系统之一越来越受到重视。

4 garnering   

v.收集并（通常）贮藏（某物），取得，获得( garner的现在分词 )

参考例句：

• And at the forefront was Bryant, garnering nothing but praise from his coaches and teammates. 而站在最前沿的就是科比，他也因此获得了教练和队友的赞美。 来自互联网

5 volatility   

n.挥发性，挥发度，轻快，（性格）反复无常

参考例句：

• That was one reason why volatility was so low last year.这也是去年波动性如此低的原因之一。
• Yet because volatility remained low for so long,disaster myopia prevailed.然而，由于相当长的时间里波动性小，灾难短视就获胜了。

6 amplified   

放大，扩大( amplify的过去式和过去分词 )； 增强； 详述

参考例句：

• He amplified on his remarks with drawings and figures. 他用图表详细地解释了他的话。
• He amplified the whole course of the incident. 他详述了事件的全过程。

7 equity   

n.公正，公平，（无固定利息的）股票

参考例句：

• They shared the work of the house with equity.他们公平地分担家务。
• To capture his equity,Murphy must either sell or refinance.要获得资产净值，墨菲必须出售或者重新融资。

8 jersey   

n.运动衫

参考例句：

• He wears a cotton jersey when he plays football.他穿运动衫踢足球。
• They were dressed alike in blue jersey and knickers.他们穿着一致，都是蓝色的运动衫和灯笼短裤。

9 broker   

n.中间人，经纪人；v.作为中间人来安排

参考例句：

• He baited the broker by promises of higher commissions.他答应给更高的佣金来引诱那位经纪人。
• I'm a real estate broker.我是不动产经纪人。

10 proximity   

n.接近，邻近

参考例句：

• Marriages in proximity of blood are forbidden by the law.法律规定禁止近亲结婚。
• Their house is in close proximity to ours.他们的房子很接近我们的。

11 controversy   

n.争论，辩论，争吵

参考例句：

• That is a fact beyond controversy.那是一个无可争论的事实。
• We ran the risk of becoming the butt of every controversy.我们要冒使自己在所有的纷争中都成为众矢之的的风险。

12 runaway   

n.逃走的人，逃亡，亡命者；adj.逃亡的，逃走的

参考例句：

• The police have not found the runaway to date.警察迄今没抓到逃犯。
• He was praised for bringing up the runaway horse.他勒住了脱缰之马受到了表扬。

13 implement   

n.(pl.)工具，器具；vt.实行，实施，执行

参考例句：

• Don't undertake a project unless you can implement it.不要承担一项计划，除非你能完成这项计划。
• The best implement for digging a garden is a spade.在花园里挖土的最好工具是铁锹。

14 ongoing   

adj.进行中的，前进的

参考例句：

• The problem is ongoing.这个问题尚未解决。
• The issues raised in the report relate directly to Age Concern's ongoing work in this area.报告中提出的问题与“关心老人”组织在这方面正在做的工作有直接的关系。

15 backwards   

adv.往回地，向原处，倒，相反，前后倒置地

参考例句：

• He turned on the light and began to pace backwards and forwards.他打开电灯并开始走来走去。
• All the girls fell over backwards to get the party ready.姑娘们迫不及待地为聚会做准备。

16 makers   

n.制造者，制造商（maker的复数形式）

参考例句：

• The makers of the product assured us that there had been no sacrifice of quality. 这一产品的制造商向我们保证说他们没有牺牲质量。
• The makers are about to launch out a new product. 制造商们马上要生产一种新产品。 来自《简明英汉词典》

17 stabilize   

vt.（使）稳定，使稳固，使稳定平衡；vi.稳定

参考例句：

• They are eager to stabilize currencies.他们急于稳定货币。
• His blood pressure tended to stabilize.他的血压趋向稳定。

18 withdrawals   

n.收回，取回，撤回( withdrawal的名词复数 )；撤退，撤走；收回[取回，撤回，撤退，撤走]的实例；推出（组织），提走（存款），戒除毒瘾，对说过的话收回，孤僻

参考例句：

• He has made several withdrawals from his bank account. 他从银行账户上提了几次款。 来自《简明英汉词典》
• It is not the bank's policy to deduct interest on withdrawals. 提款需扣除利息这并非是本银行的政策。 来自辞典例句