Last week’s news that Reuters sells early access to monthly consumer-confidence data to customers who use the statistics in high-frequency trading points to the danger of that trading, said Michael Gayed, chief investment strategist for Pension Partners.
“For these high-frequency trading firms,” the two-second advantage Reuters is giving to its customers is “a very negative thing,” he told Newsmax TV in an exclusive interview.
“Speed can be much more dangerous to markets than most people realize,” he said. “If you want to get proof of that, take a look at May 6, 2010 — the Flash Crash, when you had, effectively, all of these very high frequency trades bouncing off of each other, ultimately creating a void in liquidity.”
Gayed also cited the brief plunge by stocks April 23, after someone hacked The Associated Press’ Twitter account, posting a false report of a White House bombing. “It was a simple tweet, and the market was collapsing in a period of literally 20 seconds,” Gayed said.