Humans never learn and apparently neither do robots. Autonomous trading AIs went on a spending spree at Knight Capital Group in New Jersey this week, buying up shares in everything from RadioShack to Ford and American Airlines (ouch) in a 45-minute frenzy of disobedience. The company tried to offload the unwanted stock, but discovered it was already nearly half a billion dollars in the red — enough to wipe out its entire profit from 2011 and “severely impact” its ability to conduct business. If only it had protected itself with one of these.
The fiasco, the third stock trading debacle in the last five months, revived calls for bolder changes to a computer-driven market that has been hobbled by its own complexity and speed.