Automation In Finance Essay

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Recommended: Case studies on ethics in finance

Ibrahim Alkhunaifir
Jeffrey Koperski
Phil 210B
February 27, 2014
Automation in Finance
There is no denying how much technology has impacted each of our lives. With technology, comes the opportunity for a lot of ethical issues. Technology has made information and processes much more efficient and accessible, but in some cases this efficiency that is powered by technology can cause privacy issues, reliability issues and harm for organizations and even society. We have seen technology integrated into almost every sector of the business world and general society. In the article, “Ethics, Finance, and Automation: A Preliminary Survey of Problems in High Frequency Trading,” by Michael Davis, Andrew Kumiega and Ben Van Vilet, ethical issues regarding automation in the finance world are discussed.
Most of us are so used to using technology and automated processes that we, as a society, have become almost reliant and dependent on it. The article begins by explaining how automated systems have made such an impact on the financial market and in financial services; everything from trade execution to risk management is now automated. Even with trading volume alone, 75% of it is handled by a type of automation (Davis, Kumiega, and Van Vilet). The authors explain how putting so much confidence in automation technology can be very risky and introduce a number of ethical issues. A good example of this was seen in 2012 when the Knight Capital Group used their new trading software which caused them to lose $440 million in less than a half hour and also crashed the New York Stock Exchange (Davis, Kumiega, and Van Vilet). At first glance, it may seem like the only harm done was to the company itself and the inconvenience of closing down the stock mar...

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...ode of ethics that consist of some of the principles we are already familiar with: holding paramount health, safety and welfare of the public; acting only in their specialty; and examining societal and environmental impacts (Smith). These are all very important ethical principles that could really help the public gain and maintain trust in the financial market which could help the economy.

Works Cited
Davis, Michael, Andrew Kumiega, and Ben Vilet. "Ethics, Finance, and Automation: A Preliminary Survey of Problems in High Frequency Trading." Science and Engineering Ethics 19.3 (2013): 851-74. 09 Nov. 2012. Web. 25 Feb. 2014
Smith, Jimmy H. "Principles of Ethical Conduct in Engineering Practice Under NAFTA. "Principles of Ethical Conduct in Engineering Practice Under NAFTA. Murdough Center for Engineering Professionalism, 07 Jan. 2000. Web. 25 Feb. 2014

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