Algorithms take control of Wall Street

Interesting article at arstechnica.com (HT to Telecom Ramblings):

>>Last spring, Dow Jones launched a new service called Lexicon, which sends real-time financial news to professional investors. This in itself is not surprising. The company behind The Wall Street Journal and Dow Jones Newswires made its name by publishing the kind of news that moves the stock market. But many of the professional investors subscribing to Lexicon aren't human—they're algorithms, the lines of code that govern an increasing amount of global trading activity—and they don't read news the way humans do. They don't need their information delivered in the form of a story or even in sentences. They just want data—the hard, actionable information that those words represent.

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For individual investors, trading with algorithms has been a boon: today, they can buy and sell stocks much faster, cheaper, and easier than ever before. But from a systemic perspective, the stock market risks spinning out of control. Even if each individual algorithm makes perfect sense, collectively they obey an emergent logic—artificial intelligence, but not artificial human intelligence. It is, simply, alien, operating at the natural scale of silicon, not neurons and synapses. We may be able to slow it down, but we can never contain, control, or comprehend it. It's the machines' market now; we just trade in it.