[ by Larry Goldfarb ]

High speed trading is giving rise to errors on almost a daily basis.  Some of the errors have been earth shaking like the Facebook-NASDAQ snafu or the Knight Trading glitch or others are small and merely cause a nuisance.  For instance, on Wednesday night, the nation’s third-largest stock exchange operator, BATS Global Markets, alerted its customers that a programming mistake had caused about 435,000 trades to be executed at the wrong price over the last four years, costing traders $420,000.  A day earlier, the trading software used by the National Stock Exchange stopped functioning properly for nearly an hour, forcing other exchanges to divert trades around it. 

“The rate of change is getting so rapid that the quality assurance process isn’t as robust as it should be,” said George Simon, a partner at Foley & Lardner who used to work at the Securities and Exchange Commission, which oversees the nation’s stock markets. “This has been something that has been brewing now for five years, and it keeps getting worse.”

Executives at some other exchanges have said that more sweeping changes are necessary. At a hearing in December, Joe Mecane, an executive at the New York Stock Exchange’s parent company, said that “technology and our market structure have created unnecessary complexity and mistrust of markets.”

For more information, please read [NYT, 1/11/13].