An article relating to this blog post on Finextra:
FSA looks into high-frequency trading and dark pools
The Financial Services Authority (FSA) is examining the impact of high-frequency trading and the use of dark pools on the UK equity market.
Paul Krugman in the NY Times
writes that high frequency trading serves no social purpose other than to offer one person (or one bank) a profit.
"Just to be clear: financial speculation can serve a useful purpose. It's good, for example, that futures markets provide an incentive to stockpile heating oil before the weather gets cold and stockpile gasoline ahead of the summer driving season.
But speculation based on information not available to the public at large is a very different matter. As the U.C.L.A. economist Jack Hirshleifer showed back in 1971, such speculation often combines "private profitability" with "social uselessness." "