My understanding of the point in the video is that the volatility resulting from the systematic risk is a symptom of the market not having enough normal/baseline volatility to clear out the dead wood, so to speak. Quite analogous to forest management, where more smaller fires clear out the fuel on a regular basis so that a large scale fire cannot occur.
Now it is probably the case that the HFT traders make The Market far more intertwined than is sensible, and hence far too combustible as a whole. In the video Taleb points out that he favours many smaller organisations over fewer larger ones for the simple fact that within an ecosystem a few small systems can fail with little negative effects on the whole. Where as if a large system fails it is far more catastrophic.
So perhaps the solution here is to make some sort of upper limit in financial (HFT, Banks, etc) firms so that there would be more smaller ones, where failure would be more common and the destruction of smaller companies should not disasterously affect the system as a whole.
That said, the recent wiping of trillions of dollars in value, seemed to be an effect of the many years of apparent calm. With a lot of companies creating new derivatives with the appearance of safety but were anything but safe.
To bring it back to the parent article, I do agree that everyone on the exchange should be paying some sort of transaction fee, I have to pay one when trading shares, and so should other traders.
Now it is probably the case that the HFT traders make The Market far more intertwined than is sensible, and hence far too combustible as a whole. In the video Taleb points out that he favours many smaller organisations over fewer larger ones for the simple fact that within an ecosystem a few small systems can fail with little negative effects on the whole. Where as if a large system fails it is far more catastrophic.
So perhaps the solution here is to make some sort of upper limit in financial (HFT, Banks, etc) firms so that there would be more smaller ones, where failure would be more common and the destruction of smaller companies should not disasterously affect the system as a whole.
That said, the recent wiping of trillions of dollars in value, seemed to be an effect of the many years of apparent calm. With a lot of companies creating new derivatives with the appearance of safety but were anything but safe.
To bring it back to the parent article, I do agree that everyone on the exchange should be paying some sort of transaction fee, I have to pay one when trading shares, and so should other traders.