Rogue AI loses Knight Capital $440 million, scares the hell out of humans.

We are not, as Richard Brautigan once (ironically) hoped, all watched over by machines of loving grace. Last Thursday, newly installed trading software at Knight Capital, which is designed to anticipate swift changes in the market, ungracefully glitched out, taking an estimated $440 million with it, the New York Times reports.

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The Knight Capital Group announced on Thursday that it lost $440 million when it sold all the stocks it accidentally bought Wednesday morning because a computer glitch.

The problem on Wednesday led the firm’s computers to rapidly buy and sell millions of shares in over a hundred stocks for about 45 minutes after the markets opened. Those trades pushed the value of many stocks up, and the company’s losses appear to have occurred when it had to sell the overvalued shares back into the market at a lower price.

With videogames, we should be well aware of the fallibility and total inhumanity of bots, because our life inside of a game depends on their trustworthiness as opponents or teammates. Would your Call of Duty squadmates handle your money?

Over at the Wall Street Journal, trepedation of the market’s growing reliance on machines is also being expressed:

Many of the fears originate from within the industry. “We have created a situation that is beyond our ability to control,” said Thomas Peterffy, founder of Interactive Brokers Group and a pioneer in electronic trading. “These problems will continue if we don’t slow things down.”

Be warned, The Matrix, Terminator, Battlestar Galactica, etc. may be drawing closer to reality than we’d like to admit. Never, though, did those fictions predict it would come in such an esoteric encoding of a non-anthropomorphic, invisible beast.