raging bulls

Naslund, Steve SNaslund at medline.com
Wed Aug 8 10:34:52 CDT 2012


It might be complicated.  I am just saying it is probably not as
complicated as a permanent transatlantic aerial drone network or owning
your own particle accelerator.  I think all the anti-replay,
anti-backdating concerns have probably been solved in the various
public/private key networks, if not, there are certainly ways to do so.
My only point was to say that there are technical ways to make high freq
trading more inherently fair and there does not need to be a
connectivity "arms race" unless that is what the markets want to do.
The markets created this monster, they can't really complain about
something they have the power to eliminate any time they want.  If the
majority of traders feel they are getting screwed, the policies will
change.

Looking at this from a strictly engineer's point of view, it seems like
a very, very, risky way to handle extremely large sums of money.  The
systems are already outpacing the speeds they can be controlled and
managed.  At some point the systemic risk to the entire system will be
the regulating factor.  Let's hope they can head it off before it
happens.  I can very well see a point where a major system meltdown will
cause an entire day of trading to be unwound because there is no other
choice.

You could always require all the trading systems to be in a single place
but there will always be backend systems to control and monitor them
somewhere else.  Hey, putting everyone in the same place is how markets
worked before when you needed a guy standing on the floor in order to
operate.

Steve

-----Original Message-----
From: Michael Loftis [mailto:mloftis at wgops.com] 
Sent: Wednesday, August 08, 2012 9:56 AM
To: nanog at nanog.org
Subject: Re: raging bulls

On Wed, Aug 8, 2012 at 8:08 AM, Brett Frankenberger
<rbf+nanog at panix.com> wrote:

> Even if you execute the trades based on a GPS timestamp (I'm ignoring 
> all the logistics of preventing cheating here), it doesn't matter, 
> because the computer that got the information first will make the 
> trading decision first.
>
>      -- Brett
>

Such a system would be pretty complicated because it would also have to
prevent intentional 'backdating' of trades as well.  Then you've got the
market data itself (as just mentioned) -- getting the information first
is a big part of the latency problem for the quants.



-- 

"Genius might be described as a supreme capacity for getting its
possessors into trouble of all kinds."
-- Samuel Butler




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