Trading Oddities                                              03/08/24
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I like to watch the financial markets  from a distance, for fun. For a
few years, I've been feeling like  market behavior has become less and
less  human,  but  I  haven't really  bothered  with  examining  those
feelings  or  their source  (apart  from  wild internal  speculation).
Today, I  stumbled on an  article[1] referencing a  research paper[2],
that put what I've been feeling into words.

In essence,  AI or  algorithm based trading  systems, used  by massive
organizations  like  BlackRock  and  J.P.  Morgan,  are  changing  the
landscape  in  ways  that  weren't  expected.  Because  these  systems
function  in  similar  ways,  using  similar  or  identical  data  and
associated   biases,  they   automatically  form   mutually-beneficial
relationships  /   behaviors.  Though  the  systems   have  no  actual
connectivity,  and no  way  to work  together directly--and no  actual
agreement on the  corporate side (they claim), they exhibit  a type of
collusion that is in fact modifying the landscape of trading.

If you've felt like something is not  right in the world of finance (I
mean, more  than usual), have a  look at the article  and/or study, it
will be worth your time.

[1] https://knowledge.wharton.upenn.edu/article/how-ai-powered-collusion-in-stock-trading-could-hurt-price-formation/
[2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4452704

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