One High-Speed Trader Made 4 Percent Of The Stock Market’s Trades Last Week

A single computer program placed and canceled orders that made up four percent of the stock market’s entire volume of trading last week, according to Nanex, a top tracker of high-frequency trading. The high-frequency computer trading system made and canceled orders every 25 milliseconds on about 500 different stocks, Nanex said, before stopping Friday morning. Though motive is still unclear, it is likely that the computer trading was testing the system — that is, gumming up the market to allow other computer traders to gain an advantage. Federal regulators are currently weighing how they can rein in the risky practice of high-frequency trading, which adds volatility to the market but has “absolutely no social value,” according to one of its pioneers. The Federal Reserve of Chicago warned the Securities and Exchange Commission about the dangers of the practice more than two years ago, but regulators have been slow to act.