Wall Street and the Mismanagement of Software

CowboyRobot writes "Last week, a bug in high-frequency trading software from Knight Capital Group resulted in erroneous trades costing almost a half-billion dollars. So, what went wrong and how can they, or any other software developer, prevent something similar from happening again? In hindsight, it's clear that the developers did not verify the code under enough conditions. But the real issue is how these high-frequency trades work in the first place. Robert Dewar at Dr. Dobb's suggests the financial industry needs to take a page from the avionics rulebook, which has very strict guidelines about what code can be implemented due to the high cost of failure in that field. 'High-frequency automated trading is not avionics flight control, but the aviation industry has demonstrated that safe, reliable real-time software is possible, practical, and necessary. It requires appropriate development technology and processes as well as a culture that thinks in terms of safety (or reliability) first. That is the real lesson to be learned from last week's incident. It doesn't come for free, but it certainly costs less than $440M.'"

Comments

Wny not just tax trades?

[Anonymous Coward]

First 100 trades in a day: free
Next 1000, taxed at 0.02%
Next 1000, taxed at 0.1%

And so on.

This would do wonders for the problem.

Re:Not comparable

[MickyTheIdiot]

Is it me or are we continuously using "profits" as a excuse for bad *anything* and pushing that idea to an extreme?

Re:So, sue the developer for the cost he caused.

[140Mandak262Jamuna]

They will sue the unemployed coder for 400 million dollars. Some CXO will certify in good faith he hopes to collect the money. S&P will accept the certificate and rate the credit worthiness of the company AAA. Goldman Sachs will use S&P rating to sell the company to some poor smuck, your 401K mutual fund or my pension fund or our municipalities long term fund at 400 million over the true worth. Everyone involved in the racket will award themselves huge bonus, consultation fee and commissions. That is how 400 million dollars of profits are created, transferred to private individuals and the corresponding 400 million dollar loss for the counter parties are socialized. Either small investors, or government institutionalized investors, or straight forward government bail out. We are always the counterparties who are on the losing end of every such gigantic whoppers.

America once had a great capitalism. Now we have the system where no matter what risk the rich insiders take, all the profits are theirs and all the losses are ours. A system where the ruling elites are protected from the consequences of their actions, where they can rig the game so that they win no matter what, is how societal collapse begins. Jared Diamond's book "Collapse" discusses specific case studies showing how it collapses. Greenland colonization from Iceland, Pueblo Indians, Easter Island were what he discusses in great detail.