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The floor of the New York Stock Exchange, filled with traders in a frenzy of activity, is perhaps the iconic image of financial markets. But today, the TV pictures we see of the trading floor are largely symbolic. The frenzy of activity instead takes place in server rooms, with human market makers replaced by the algorithms of high-frequency trading firms. They make their money with razor-thin margins and huge volumes. To thrive, they must master both technology and strategy. The debate now rages as to how beneficial they are to markets and how they should be regulated.
Date of Publication: July-Aug. 2012