Stock trading remodeled by flash traders

Ms. Ester Levanon, CEO of the Tel Aviv Stock Exchange (TASE) has recently commented that Flash Traders (also known as Algorithmic Traders) take up a growing capacity of the daily volume of trade in the TASE, as well as in other leading stock exchange venues. Flash Trading refers to traders in the capital market that use high speed digital processing to compute real time supply and demand data for shares traded in the stock exchange. Ms. Levanon noted that the most prominent experts in this field are alumni of the IDF's 8200 division, one of the military's elite intelligence units. According to Ms. Levanon, these IDF-trained computer experts are engaged in developing programs capable of identifying and responding to infinitesimal fluctuations in the prices of shares, subsequently deriving profit from arbitrage.

In Ms. Levanon's opinion, for day traders and speculative traders that utilize more traditional methods of trading, the presence of Flash Traders impairs the ability to make instantaneous profit, because traditional traders' response times will always be inferior to that of a computer.

Ms. Levanon also emphasized that the prominence of stock exchanges around the world depends heavily on their ability to accommodate trade methods dictated by Flash Traders. In this respect, Ms. Levanon reported that given the high costs of the infrastructure for computerized trade, the TASE is contemplating collaboration with a major foreign stock exchange. She also noted that computing personnel in the TASE accounts for approximately one half of the total workforce in the TASE. Source: Globes (article in Hebrew).