Regulators Can’t Keep Pace with Market Technology

Stripped down to its essence, the root cause of last week’s trading glitch that nearly wiped out Knight Capital Group (NYSE: KCG)  isn’t real complicated.

In a nutshell, the problem is that market regulators simply can’t keep up with advances in technology — in this case the proliferation of high frequency trading — that seek to squeeze every last bit of profit out of complex, fast-moving global markets.

The regulators try to hold their own, but the engineers and math whizzes from Stanford, Harvard, and the Massachusetts Institute of Technology are laps ahead of them.

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