Wall St. Trading Servers To Power Off-Hour Clouds?

miller60 writes "As cloud computing gains traction, some Wall Street firms running armadas of servers to power high-frequency trading operations are contemplating leasing out their excess computing capacity after the trading day ends at 4 p.m. 'Once 4:30 rolls around, we don't need those machines,' said one CTO of a market data firm. 'There may be an opportunity there.' A similar revelation led to the creation of the cloud computing operation at Amazon.com, which built its infrastructure to handle peak Christmas-season loads that lasted just a few weeks each year."

Comments

Is This Secure?

[WrongSizeGlass]

I wonder if this poses any security concerns or problems? Is letting 'cloud users' access the servers that run out financial markets really a good idea?

Re:Is This Secure?

[sopssa]

But Virtual Machine's are only as good as they're designed. Even the most known and biggest vendor VMWare has had serious bug and exploits in their software. For one example see this, which let an exe running in the guest OS exploit a vulnerability in the VM code to get code run in the host OS. A serious security risk, especially when were talking about Wall Street. Even getting an access to their internal network opens new possibilities.

Just because of this I think it's a stupid idea. Even more so because the gain is not really that much, but it can be really destructive. Someone will find a way to exploit it.

Re:Is This Secure?

[Huh?]

I could see this being useful as some sort of "private" cloud during off hours (i.e. selling time to banks for batch and accrual operations...etc), but allowing the unwashed masses access to the underlying infrastructure of something as important as financial trading just seems like a recipe for a security disaster.

Not a new idea...

[LostCluster]

Compuserve was founded by a life insurance company to make a consumer service run on their business systems with the expectation that the consumers would use it during non-working hours.

When it comes down to it, nobody needs their clock cycles 24/7 at even load, even though that's what computers are designed to do. Shared services for the win!

heh...yeah.

[Pojut]

$20 says this idea was cooked up by someone who heard about "cloud computing" on the radio while in his cushy office, signing official looking papers and making a big fuss about "revenue".

Get rid of them entirely

[TubeSteak]

Not to derail the conversation, but high frequency trading doesn't contribute much to the stock market's ability to set optimal prices.

What actually happens is that high frequency traders squeeze in while prices are moving and they siphon off money. Neither the original seller, nor the original buyer gets the best price, and the high frequency traders make a mint.

Re:Get rid of them entirely

[TubeSteak]

Exactly this. High frequency trading really perverts what the markets are for. Make a law that you have to hold a stock for at least a day (maybe even just an hour would work) and you might restore some sanity to the market as well as giving those traders who don't have server farms running advanced trading algorithms a fighting chance.

You'd only have to slow them down by a second (literally 1 second) to completely bring their business model to a halt.

HFTs buy zero second data feeds from an exchange and some exchanges actually sell pre-zero-sec access.
Meaning that the HFTs can see trades a few hundred milliseconds before they post, allowing the trader to sneak in and buy/sell.
The SEC is looking to ban the practice, but hasn't gotten around to doing so yet.

"Once 4:30 rolls around..."

[mcmonkey]

Said the CTO who is now looking for a job.

NYSE closes at 4:30. But there are other markets. And the data flows 24/7.

There is no reason for these systems to have spare cycles.

Re:"Once 4:30 rolls around..."

[eastlight_jim]

Believe it or not, trading by computer has now become so quick that companies vie for server space closer and closer to the place where trades are taking place. This article" even goes as far as suggesting that a 1 millisecond advantage in trading applications can be worth $100 million a year to a major brokerage firm with such low-latency trading becoming more common.

I think the ping to Asia may be a bit more than that!

Re:So what they are saying is

[ottothecow]

It can run 24/7...we just don't want it to.

In fact, with after hours trading and foreign markets, it really does run 24/7, just not on the floor of the NYSE (and not as liquid).

I would posit that a good reason for this might be that the stock market is already panicky enough and being closed for most of the 24 hour day gives people a little more time to thing about what is going on. A perfect example is companies that release earnings and other important news after the closing bell. It gives people time to process the information rather than giving the fastest guy a chance to make a quick profit. For the *real* purpose of the stock exchange, it does not need to be open. If your goal is to raise capital for a business (or invest in one) rather than speculate and day-trade, the current market hours are just fine.

destroy them

[roman_mir]

I dream that this entire high frequency scam is declared illegal and all involved are placed where they belong with all of their property confiscated.

Here is what happens when HFT is done: 2 parties agree on a price, the HFT meddles with in a way, that takes out money from the transaction, so the buyer sells lower and the seller buys higher. That little bit of difference is stolen by HFT.

These are thieves, we are discussing here, understand that. So they found a way to make some profit on their infrastructure? Well, great for them. 4,000,000 transactions per second they are talking about for one shop. That's 4,000,000 thefts per second.