Architects of Electronic Trading: Technology Leaders Who Are Shaping Today's Financial Markets

CHAPTER 9

Room for Improvement in Risk Control

As the industry employs more technology, we are obligated to ensure that we keep it under control. Runaway algorithms, fat finger errors, as well as non-technology risks like bad actors, are all potential sources of market destabilization. Here, the answer lies in a combination of technology and human oversight. In this chapter, Mark Gorton of Tower Research Capital, a hedge fund, argues that technology has helped to create a fairer, more transparent marketplace than ever before. But that, as an industry, we must deploy a hybrid approach of centrally applied automated risk controls and human vigilance to ensure that the quality of global financial markets continues to improve.

■ Mark Gorton, Tower Research Capital

Managing director Mark Gorton worked in the proprietary trading department of Credit Suisse First Boston where he traded for four and a half years and built sophisticated tools used to analyze the markets. In spring 1998, he left Credit Suisse First Boston to set up Tower Research Capital LLC. Mr. Gorton's professional and educational background provides an unusual combination of math skills and financial knowledge to create and orchestrate the trading strategies utilized at Tower. He has been involved in a number of technology ventures, including Limewire, that are unrelated to financial markets.

How are you implementing technology innovations in a broader sense?

As a trading firm, we opportunistically implement technology ...