Algorithms Probably Caused a Flash Crash of the British Pound

Overnight, the British pound dropped by 6 percent, to $1.13. Analysts are pointing the finger at an increasingly familiar financial scapegoat: the algorithm. Though the crash hasn’t yet been definitively linked to algorithmic trading, the Economist argues that the speed of last night’s drop points at software gone haywire. (MIT Technology Review) read more

The Quants Are Taking Over Wall Street

Today, Two Sigma is the fastest growing hedge fund on Wall Street. It manages some $35 billion and made its two founders, Siegel and John Overdeck, billionaires themselves. Quant funds like those managed by Two Sigma and Renaissance Technologies have been consistently posting solid returns in recent years while most other hedge fund strategies centered around the trading decisions of human beings have struggled mightily. (Forbes)