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Ron Geffner, Sadis & Goldberg Financial Services head, and Jeff Ma, former MIT BlackJack team member, on who is to blame for Knight Capital’s gl...
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Or is it man -- machine.
Texas CEO Jeff -- as it is legal or financial services had run governor.
Is -- Cisco Iran is on the phone to help -- breakdown August algorithm glitch as it's being called it costs.
Knight capital millions of dollars -- I'll start with you I'm being told that you've spoken to somebody.
That maybe has a theory about what exactly what wrong and night capitals mathematical -- them.
Yeah I mean I think that there's a lot of stuff Apollo and wrong and if you the question is manners -- I think this is clearly man.
There's just some jokes going around about maybe this was a negative sign caused -- you know wrong place but the bottom line is -- -- What's happening yeah they're jobs are you serious we need to declare.
I mean I mean I I've gotten -- someone -- Who it is a very that there is you know it's a mistake it's a human mistake where there is -- a careless mistake that was made.
But it wasn't tested for properly and then when he got out into the sort of production environment it -- -- problem and it caused them essentially.
To buy high and sell low for a period of time so it was a human -- The -- what did you wanna ask you this -- trading algorithms have become very commonplace.
With market making companies whether it's and -- capital whether it's a -- -- or Goldman or Morgan Stanley they're all using it do you think that these are fallible.
-- I guess that mathematical equations you think that the fallible about the mathematician you are you tell me.
I think that there are a lot less powerful -- Beings are -- mean and at the core.
People always blame machines for these things which humans program the machines of the humans program them incorrectly.
They're not gonna be able to get the right answers.
All right let me go to -- on a couple of things here because of -- if you look back -- through history it's great to see if you anyway.
Lot of issues are on a lot of issues that need that the SEC is gonna have to look at used to be at the SEC a take a sea of but for you have the night issued the FaceBook IPO without trading issues with the NASDAQ pleasure separate issue -- -- trades had to be.
Cut off I mean this is that over the flash crash I mean it goes on and on.
What does -- S -- to do panel inquiry.
-- what are they gonna get.
What part two point -- your annually at a really good.
Overview by look at the history.
They're reading elicit -- speculators believe will be FTC for doing nothing or say those people really need to educate themselves.
If you look at the history -- -- they are she is sure to.
Request for information early 2010 before the flash crash trying to gain information they -- circuit breakers -- 2000 and subsequently.
-- new circuit breakers or other commercials coming in line fact that February 2000 searching first and foremost yes trichet.
This trouble Leary and they're gathering information.
Speaking truth is actually assisted think everybody down the line trying to assess what went well.
We're new technology are going to -- have a new Rickles I remembered her in the face of course in -- I don't think -- car accidents back.
-- -- -- -- -- -- -- -- -- -- -- But here's the into accepting that it -- about -- but Jeff just -- -- for a moment I was looking back in cutter model myself about the flash crash.
2010.
It one of the things that happened at that as best we know is that there was -- human -- that fat finger trade if you will but the algorithmic trading made it worse.
That's why we lost a thousand.
Points that day.
So may know that you're saying that it's better than him an -- but the two combined have created some massive headaches for our markets.
-- -- -- -- And that's -- look like Atlantic that's Jeff welcome back to percent.
Yet I think the reality is that.
Regardless computers are here to stay I mean the way that the markets -- the spreads have tightened and that.
The the impetus you have to be fast you can't be like no one can be as fast as these computers are.
And processing data and making markets so market makers are all going to be electronic in the computers -- -- so the question is not.
Should computers B vs human beings the question is how -- we tighten things up so when there's a -- -- computers it doesn't go rent it like it -- in the flash -- okay.
-- -- -- -- So what -- it weren't discussed are now the impact on the market but some of the trying to divert part of what we're discussing a really controls of -- that may not.
-- issuer of securities or an instrument that's really -- instituting.
Some better policing within those institutions.
Somewhat emotional force -- and having the ramifications be greater than what they are.
Ron -- that are the San Francisco and Jeff my as well gentlemen thanks to both of view it as a fascinating discussion that we're gonna stay on I really appreciate them coming on.
Thank our -- great weekend.
All right net flicks her neck tie.
