I meant to blog Scott Patterson's Wall Street Journal's article on the escalating technology battle between high frequency traders and the big brokerages this morning but I didn't get around to it, and good thing too because Josh Brown at The Reformed Broker has put up a definitive post on the subject and the article.
Since human beings evolved in Africa side by side with large beasts, Africa's animals evolved defenses to avoid being hunted to extinction. Unfortunately, the giant animals of North America or Europe (16 foot tall rats, a moose the size of a rhinoceros) had no such history of tandem evolution, so when humans arrived, they were easily killed off. They hadn't the time to develop defenses.
The parallel here is a simple one, high frequency trading has doubled in terms of it's percentage of trading in less than a ten year time frame. The big buyside market participants, like mutual funds, pension funds and asset managers, now barely stand a chance when trading with the machines. They are being scalped, rooked and shaken every minute of the day.
Thanks Josh for doing SeanReadsTheNews' job for me!