You’re probably terrified enough of the simple amoral greed of the international banking scene, but what about the fact that trading is now extensively run by AIs? Called algorithmic or high-frequency trading, the practice has bots monitoring market fluctuations and international news and making incredibly fast bids to take advantage of the slightest opportunities. Being first is everything in this world; property prices around trading exchanges skyrocket due to traders opening offices as close to them as possible to reduce latency.
Because it involves so much money, the world of algorithmic trading is incredibly secretive, and one can rarely be quite sure how and when and where it’s happening. But experts are pretty sure of one example, in which a bot made $2.4 million in a day. It invested in a company called Altera a second after a rumour was published that claimed Intel was in talks to buy the company, the implication being that the bot read the story, interpreted it, decided it was an opportunity, and made the trade, all in just a second after the news hit. Humans don’t have a hope of keeping up.
Entrusting markets to bots has caused some scary moments, including the May 2010 Flash Crash, in which the Dow Jones plunged by 600 points before suddenly recovering, all as a result of bot-powered high-frequency trading. It’s all pretty arcane stuff, but essentially, a bot sold a £4.1 billion of futures, putting 75,000 contracts on the market over the course of 20 agonising minutes. As it did so, prices fell, and other high-frequency trading bots began trading them, selling and reselling them like hot potatoes at a rate that hit 27,000 contracts in just 14 seconds. The original bot, meanwhile, simply accelerated its selling of the stock. The market watched in horror as everything went mad and then recovered, but it took months for the investigation to figure out how it happened. And now we’re all at the mercy of these things.