Review: Dark Pools: The Rise of AI Trading Machines and the Looming Threat to Wall Street, by Scott Patterson, £6.75, (Dh39)
A It has not escaped the notice of investors that western stock markets have been malfunctioning.
Traders report giant spikes in stock prices lasting mere minutes or even seconds, while profits on trades are gobbled up by supercomputers sweeping the market at speeds faster than humanly possible.
No wonder retail investors are fleeing US markets in droves - the game is increasingly rigged against them.
Such is the charge laid out in Dark Pools: The rise of AI Trading Machines and the Looming Threat to Wall Street, a new book by Scott Patterson, which charts the 25-year "arms race" of computerised trading.
Technophobes can relax. The story is told through a battle of egos among pioneering computer nerds who squared off in the 1990s against the Nasdaq and the New York Stock Exchange in an effort to make trading fairer - or so they hoped.
By removing humans from the equation, the idealistic programmers aimed to eliminate scalping by the market makers who dominated trading floors.
Over the decades, the open-outcry trading pits of old were slowly replaced by algorithms and new venues with names such as NYSE Arca, BATS Global and Chi-X entering the business lexicon.
But the irony is these programmers ultimately inherited the mantle of the scalpers they forced out of business on Wall Street.
Not only that, the firms engaged in high-frequency trading are finding it increasingly difficult to make money and are looking to the next big thing, such as hedge funds controlled entirely by artificial intelligence (AI) software.
Meanwhile, high-frequency trading continues to make headlines.
This month, an algorithm misfiring at Knight Capital punched a US$440 million (Dh1.61 billion) hole in its balance sheet. Knight, the biggest market maker in thousands of US stocks, saw its business collapse in about 30 minutes.
And, as if to underscore the risks to the banking system, another so-called "rogue algorithm" at Royal Bank of Scotland sawed through the foreign exchange markets just a week later.
Engagingly written, memorable and with a constant spotlight on the questionable social value high-frequency trading brings, Dark Pools gives a head start for anyone looking to understand what is likely to be the next regulatory battle over the future of markets.
ghunter@thenational.ae
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The National's picks
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Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
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VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
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Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
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A MINECRAFT MOVIE
Director: Jared Hess
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How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
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MATCH INFO
What: 2006 World Cup quarter-final
When: July 1
Where: Gelsenkirchen Stadium, Gelsenkirchen, Germany
Result:
England 0 Portugal 0
(Portugal win 3-1 on penalties)
57%20Seconds
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