….Back then Peterffy’s efforts tended to frighten and confuse the market locals, but pretty soon everybody was using computers for trading. Fast-forward to today, when trading robots have become so ubiquitous that high-speed trading makes up more than half of all stock-market volume. In fact, Morgan Stanley recently estimated that84 percent of all stock trading is done by independent desks and brokerage firms, many using high-speed trading programs.
Proponents of all this fast trading say it helps make the markets more “liquid,” by which they mean that stocks and other financial instruments move back and forth more easily and cheaply, for capitalism. But sometimes they make markets more “liquid” in the sense that they splatter them with the gore of the high-speed trading accidents, such as Knight Capital and the Flash Crash and the Facebook IPO….