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A Sound Information Technology For A Business Organization 's Operational And Financial Success

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A sound Information Technology (IT) infrastructure can be critical to a business organization’s operational and financial success. A problem, or “glitch,” in a firm’s IT infrastructure can cripple an organization and cause severe long-term issues. Examples of such can be seen by examining the case of Knight Capital, the 2010 Dow Jones “Flash Crash,” and the use of High-Frequency Trading (HFT) on Wall Street.
HFT has been in use since the late 1700’s, although not in the form that we are familiar with today. Investors explored all available avenues to increase the speed of information, and gain a competitive advantage. Savvy traders crushed their competitors through purchasing faster ships, mail services, and early adoption of the telegraph. Today, HFT is algorithm-based. Supercomputers react to market changes, such as price and timing, and automatically initiate trades without the need for human interaction. This has allowed investment firms to buy and sell stock at speeds thousands of times faster than an average floor trader, and reduce costs through economies of scale.
Use of HFT has grown exponentially since the 1990’s. In 2012 alone, 6.4 billion shares were traded through some type of HFT. There are signs, though, that the growth of HFT is tapering off. Profits from HFT in 2014 are estimated at 1.25 billion dollars, down 74% from its 2009 peak of 4.9 billion. Nevertheless, it is still an integral part of the US Stock Market.
HFT’s impact on the US Stock Market

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