Slashdot Mirror
NJ Server Farms Remake the US Financial Markets
1sockchuck writes "The engine of Wall Street has shifted from the stock exchange floor to data centers in New Jersey, where computer-driven trading now accounts for 56 percent of all trading activity, according to the New York Times. 'While this Tron landscape is dominated by the titans of Wall Street, it affects nearly everyone who owns shares of stock or mutual funds, or who has a stake in a pension fund or works for a public company,' the Times writes. 'For better or for worse, part of your wealth, your livelihood, is throbbing through these wires.' There are also photos of the data centers powering the high-speed trading operations, while 60 Minutes has video of a huge new 'liquidity center' run by the NYSE."
There is just one difference, though. The trading machines, regardless of their location, have the same length cable to the switch. Even if it means coiling some of it up. The latency demands are so strict, the customers even care about the cable length - and it's just easier to give all the customers the same length than to maintain tiered pricing on the racks.
It doessn't. Recent regulatory changes at the SEC, and promises to "review" the situation, have carefully avoided striking at the heart of the larger investment companies and groups that both engage in this sort of behavior, and have enough spare cash to fund politicians and arrange their own "reports" for the SEC on how disemboweling thihs sort of high-speed trading would "hinder the market".
It's insider trading with a high-tech cover. The data is not avaialble to ordinary investors in time for them to take keaningful action: the millisecond of having their servers right near the NySE overwhelm the reponse times of any ordinary trading entity and prevent their meaningful responses.