In this episode I am joined by Steven McNamara. Steven is a Professor of Law at the American University of Beirut, and is currently a visiting professor at the University of Florida School of Law. Once upon a time, Steven was a corporate lawyer. He is now an academic lawyer with interests in moral theory, business ethics and technological change in financial markets. He also has a PhD in philosophy and wrote a dissertation on Kant’s use of Newtonian scientific method. We talk about the intersections between moral philosophy and high frequency trading, taking in the history of U.S. stock market in the process.
- 0:00 – Introduction
- 1:22 – The history of US stock markets
- 7:45 – The (regulatory) creation of a national market
- 13:10 – The origins of algorithmic trading
- 18:15 – What is High Frequency Trading?
- 21:30 – Does HFT ‘rig’ the market?
- 33:47 – Does the technology pose any novel threats?
- 40:30 – A utilitarian assessment of HFT: does it increase social welfare?
- 48:00 – Rejecting the utilitarian approach
- 50:30 – Fairness and reciprocity in HFT
- Steven McNamara’s homepage at the University of Florida
- ‘The Law and Ethics of High Frequency Trading‘ by Steven McNamara
- Flash Boys by Michael Lewis
- Dark Pools by Scott Patterson
- ‘Michael Lewis reflects on Flash Boys’ by Michael Lewis
- ‘Moore’s Law versus Murphy’s Law: Algorithmic Trading and its Discontents‘ by Kirilenko and Lo
- ‘A Sociology of Algorithms: High Frequency Trading and the Shaping of Markets‘ by Donald MacKenzie