 Julia La Roche for Business Insider |
It's also so complex it's hard to talk about in normal conversation.
To broaden the investing world's understanding of the topic, a new film called "The Ghost Exchange" is examining the impact of high frequency and algorithmic trading on U.S. capital markets, the lack or regulation on HFT and the systemic risks it poses.
It's directed by Camilla Sullivan and the co-produced by Rob Lyall.
To get the full story, the producers interviewed a number of market practitioners from all aspects of the market — traders, academics and regulators.
"The Ghost Exchange" focuses on three of the most recent market events, which have called into question the integrity of these markets— the "Flash Crash" of May 2010, the Facebook IPO snafu and Knight Capital losing over $400 million from a trading error.
What's really interesting is the producers of the film said they got to work on the idea in January 2012 after a conversation about the "Flash Crash."
They were actually planning to interview Knight CEO Tom Joyce for the film before his firm's trading error.
"As we were already on the road to Jersey City, we got a call. Seems there’d been a slight software error – to the tune of $440M in trading losses. Tom had to cancel our interview. However, turning lemons into lemonade we decided to see whom we could talk to about what just happened – an example of trading technology gone haywire. Well that’s what the movie is about isn’t it?!," they said in a release.
The real question the film raises, though, is how all these issues impact outside investors. It's important to know whether or not HFT ultimately takes away money and opportunity from our markets as people lose confidence in the entire system.
We went to an advanced screening at the Tribeca Grand Hotel this month and have included the highlights in the slides that follow.