Gamble of the week: 'Flash crash' deterrent

Profit from the next round of computer-caused market mayhem with this software provider to the capital markets, says Paul Hill.

The May 2010 stockmarket flash crash' was caused by a barrage of automated selling by computerised trading systems. My worry is that just over two years later it looks as if lessons have not been learned.

Instead, this type of event is increasing in frequency. In July this year a trading glitch caused mayhem around the $90bn Facebook initial public offering. Then, last month, a coding error brought American broker-dealer Knight Capital to its knees. Given that 60%-70% of all trades are now made by machines, until these complex and interlinked systems are completely overhauled, the financial industry could at any moment experience another IT catastrophe.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Paul gained a degree in electrical engineering and went on to qualify as a chartered management accountant. He has extensive corporate finance and investment experience and is a member of the Securities Institute.

Over the past 16 years Paul has held top-level financial management and M&A roles for blue-chip companies such as O2, GKN and Unilever. He is now director of his own capital investment and consultancy firm, PMH Capital Limited.

Paul is an expert at analysing companies in new, fast-growing markets, and is an extremely shrewd stock-picker.