Opinion: IT leaders could bring the economy crashing down

Should CTOs and CIOs give in to investment bankers' demands for faster trading systems?

The unquantifiable rates that algorithmic/high-frequency trading systems (HFT) operate at allow traders to respond faster to opportunities and threats on the trade floor, while also injecting liquidity into the market. But does efficiency cultivate those darker arts of trading, all hidden under the cover of a system's undetectable speed?
Bankers will always be bashed for their corruption and greed; however, with all the regulations coming into force, traders may be unable to bull-charge the markets as before. So who will rise as the new architects of doom?

Roboticised trading is already a reality in the City; human thought and decisions behind transactions are fast becoming irrelevant at trading desks; only speed and efficiency are im­portant. But where real-time tech­nology is completely appropriate for the honest bank­er, it is entirely inappropriate for the dishonest one. Surely an ethical quandary of this nature is too vital to ignore, and yet the decision to reject or embrace HFT/ algorithmic technology is made by hedge funds and investment banks?

"It may be hard to imagine a more severe recession than that we are experiencing, but with the systems we implement today, a disturbing certainty lies ahead"

When the mechanics of a trade are too fast to detect and its underlying technology is a product of the bank's internal systems department, then we technologists must accept the responsibility of playing our part in the inevitable.

It may be hard to imagine a more severe recession than that we are experiencing, but with the systems we implement today, a disturbing certainty lies ahead. We either accept our part in the chain of events that will now follow through to a complete market collapse, or make the right choices now. Rein in the power of the machine and only unleash it to those who are responsible enough to respect its command. If not, prepare to be vilified in the same way bankers are.

Those of us charged with developing, implementing, and supporting systems that operate at warp-speed rates should know our work may lead to weakening the defences of reg­ulators, crippling the ex­changes and other participants in the markets, and systematically destabilising every sector.

CTOs and CIOs must under­stand today is the history of their future, they must be held accountable now to pre-empt the re-manifestation of greed and the birth of flash mega-recessions. These future crashes will be almost biblical in scale due to the monolithic shadows they will cast over every market sector and our lives.
Technology is amoral, just as humans are - but our application of systems will in the end define us as being either culpable or completely exonerated of fault.

Jason Prasad is a senior technology analyst at Sumitomo Corp