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Somebody Stole 7 Milliseconds From the Federal Reserve
An anonymous reader writes "Three to seven milliseconds before the fed moved interest rates, billions of dollars of trades were input that took advantage of the changed rates, reaping huge profits. According to a report at Mother Jones, 'Last Wednesday, the Fed announced that it would not be tapering its bond buying program. This news was released at precisely 2 pm in Washington 'as measured by the national atomic clock.' It takes 7 milliseconds for this information to get to Chicago. However, several huge orders that were based on the Fed's decision were placed on Chicago exchanges 2-3 milliseconds after 2 pm. How did this happen?'"
Can someone explain this to me in idiot? I don't see what the problem is, nor why I should care.
Looks like you picked the wrong week to stop sniffing glue.
Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
Now we have proof!
Its because the powers who make up these Fed changes are in it for the money, they tried to get their friends billions and they hoped no one would notice the few milliseconds.
Or why it is framed as 'banks break physics' rather than 'someone talked and then fraud happened'.
they STILL didn't get first post, did they?
If you have inside information, you can act surreptitiously claiming to guess what the board is going to do. The timing wouldn't matter. If you lacked inside information, you could still have an algorithm waiting to trigger new buy/sell values based on anticipated activity levels after any fed announcement.
There isn't any story here at all.
I have a hunch, but I'm not about to tell you! The speed of light says it is possible, I'll leave it at that! The gov spends lots of money in their lockups to make sure cheating doesn't happen...
They didn't steal 7 milliseconds.. they had the information minutes or more likely a few hours before everybody else. Don't try blaming this on some simple technological advandage.
High Frequency Trading isn't new... http://en.wikipedia.org/wiki/High-frequency_trading This past June, a news article caused a $28million dollar gain: "If you’re a high-frequency trader, a few milliseconds is a big deal. And in this case, a 15-millisecond head-start meant that $28 million in shares traded hands before the number was even published, http://qz.com/91242/the-15-millisecond-head-start-that-led-to-28-million-in-trades/" This shouldn't come as a surprise that companies in the business of making money will do everything that they can to (drum roll...) make money
I'm pretty sure it was Billie Ray Valentine and Louis Winthorpe. They did this previously and managed to bankrupt Mortimer and Randolph Duke in the commodities market.
The world is made by those who show up for the job.
How did this happen? The big firms have trading algorithms that handle trading automatically. They're sophisticated enough to detect patterns, and survey enough information and websites to detect a false tweet about an attack on the White House that they brought down the stock market about 5% in a few seconds just last January.
You think the NSA conducts mass surveillance? They only have paranoia and government budgets to sustain them. Wall Street has profit and the potential for unlimited profits to motivate them. Based just on motivations alone, who do you think has the better technology?
...that if the timing is down to milliseconds then the system is broken. It's automatically an unfair playing field tipped towards the largest competitors that have the computing power and programing to operate on that time scale.
Of course nothing about Wall Street is about fairness anymore and usually they don't care about the law, either.
Washington to chicago by road is 1100 km, that's 1100 km/300000 km/s = 3.6ms, so in a straight line it would be less than 3.6ms.
Insider gets info early, writes code order trades at 1:00:00.008 pm Chicago time. PC clock isn't perfectly synced with the atomic clocks, runs a little fast for some reason.
The real thing to look out for are all the trades made before 2:00:05pm Eastern time, because it will take around 5 seconds for any human observer to read, notice, decide, and click a macro trigger. It is very safe to assume that all trades within 5 seconds of an announcement are suspect and worth investigating in more detail.
If you have insider information well ahead of the announcement, you schedule your move not days, hours, or minutes before, but a few milliseconds before, and hope nobody notices. The smaller the advance time, the less likely it is detectable.
There are a lot of assumptions in the facts of the situation, though. Are the clocks really that well synchronized and such low latency that 2ms of difference can't possibly be explained other ways? Or maybe someone just took a huge but honest gamble and it paid off? It certainly deserves investigation, but there are probably plausible alternative explanations besides something nefarious.
Information was leaked and the whole thing setup to look somewhat legitimate. 3ms is the absolute fastest anything can get from Washington to Chicago, so the information was there before the official announcement.
Goldman Sachs
"Three to seven milliseconds before the fed moved interest rates, billions of dollars of trades were input that took advantage of the changed rates"
Do you have any idea what you're talking about? The decision to taper or to continue the bond purchasing has absolutely nothing to do with the federal funds rate, which remains at the zero lower bound, where it has been for years.
Several large orders betting the other way may have been placed a few milliseconds after 2:00 PM as well. But there is a 'feature' in on-line trading that allows high frequency traders to cancel or abort trades that they claim were made as a result of 'system errors'.
Have gnu, will travel.
http://www.zerohedge.com/news/2013-09-24/tip-box-fed-made-it-possible-many-people-leak-it
Obama administration.
Yes, sleazy corporations may be taking advantage of this, but ultimately it's the administration that is responsible for leaking this information.
It would seem foolish to trade within milliseconds of 2pm without knowledge of the Fed decision, since the other party could be in DC and in legitimate possession of the information. So it is surprising that the criminal got a counterparty to accept the trade. This trick will probably only work once. There was a time when this sort of information was released after the close of markets.
Did they use TCP/IP over neutrinos?
3.757 ms is the time it takes light to travel from DC to Chicago(throw in a couple mirrors on balloons to get over that whole curvature problem, keep in mind I'm basing this off of 700 mi which is actually a driven route so I'm sure straight-line is shorter), so it -could- have happened without insider info... and some really cool lasers attached to really fast computers. (hah!)
One of the one's that sucked, that is.
NSA chairman's broker is based in Chicago. :-)
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
If people knew half the shit that Wall Street does they wouldn't like it. I think articles like this actually make it harder to have a productive conversation about the fairness of Wall Street because it makes it seem like this type of abuse is the exception rather than the norm.
There is a revolving door between Wall Street, Corporate board rooms, and the Fed. Not only do people go through that revolving door but so does information, so does hits about what might happen in the markets or what might come out of the Fed. Go watch Wall Street, either one, it's dramatic but its accurate enough for the average person to get a idea of what goes on behind those closed doors.
Since the briefed reporters entered the room with the cameras in it for the press conference two minutes before 2:00:00.00, their appearance might have contained the information. F'rexample, eyeglasses off = no taper, eyeglasses on = taper; arms crossed over chest = higher rate, hands in pocket = lower rate, arms at side = no change.
OTOH, it wouldn't surprise me if corporations (and the NSA, CIA and DIA) had made breakthroughs in information transmission vs, time, either.
This isn't high frequency trading, this is either a violation of physics or insider information.
No. And it shouldn't even come as a surprise that corrupt government officials provide insider information to greedy businesses.
But while it may not be a surprise, it is still an outrage.
Of course, the deeper problem is that the fed attempts these kinds of manipulations of the economy to begin with; if the fed couldn't do that, there wouldn't be insider trading on this kind of information in the first place.
http://www.nanex.net/aqck2/4436.html
"To those who are overly cautious, everything is impossible. "
that is all
I don't see a probem here I figured someone had a faster internet connection and with that their automated transcation systems just did the job they were to do. The following article even mentions the need for speed: "Those cables could reduce the Internet's latency by about 60 milliseconds between those two points That's an imperceptible lag for the average Internet user, but it's an eternity for high-speed stock traders. They can make or lose millions of dollars in that span of time" So nothing got stolen just someone was faster as far as I would think. http://money.cnn.com/2012/03/30/technology/internet-cable/index.htm
Paul: Father... father, the sleeper has awakened! - Dune
they have the government in their pockets, they rule your world. any questions?
What is not clear to me, and I even rtfa is did traders know the fed was going to be releasing information at 2PM? If so this could have just been a really good guess that the fed was going to continue the current course. So could traders have known an announcement was coming?
From: http://www.cnbc.com/id/101056168
"Inside a room on the top floor of the William McChesney Martin, Jr. building, Fed officials instructed reporters not to send information about that decision to the outside world before precisely 2 p.m. as measured by the national atomic clock in Colorado.
The doors were locked at 1:45 p.m., and Fed staffers handed out copies of the statement at 1:50 p.m., allowing reporters a few minutes to digest the complicated document before reporting on its contents. At 1:58 p.m. television reporters were escorted out of the room to a balcony where cameras had been prepositioned. The Fed's security rules dictated that television reporters were not allowed to speak before precisely 2 p.m. Print reporters were told they were allowed to open a phone line to their editors at headquarters offices a few moments in advance of the hour, but not allowed to interact with people on the other end of the line until exactly two p.m."
So many hacked communications channels are still possible from this. The print writers can signal the editors when making phone calls before 2pm, without talking to them. For example, the editor can instruct the reporter to call them on landline if it's a sell, or his mobile number if it's a buy. The TV reporter can wear a jacket if it's a sell, or remove it if it's a buy, so someone across the building can monitor the balcony for pre-release signals... etc.
Also, from the http://www.nanex.net/aqck2/4436.html:
"It wasn't just gold. It was everything that traded. In fact, the 1/100th of a second after 2pm was the most active 10 milliseconds in the history of the U.S. Stock an Futures markets."
This was a major, major hack, and they waited as late as they could wait, without signaling their competitors.
Another possibility is that it was a big player like Buffet or Sachs, counting on profiting one of two ways: a) precede the market b) bet wrong but cause the market to reverse, triggering massive losses to those who told their broker to trade according to the news, with a stop-loss protection.
To carry out B, you have to be able to place a second bid greater in magnitude but opposite sign to the first, about ten minutes after the news breaks. You also have the liquid assets to do it. since the bailouts doubled the national debt and gave it to banks in interest free loans with no set date of repayment, then yes, itmay be possible that investment banks did it.
Correct Horse Battery Staple: 72 bits of entropy. Enter "Correct H" into google. When it generates the phrase, that's
Conclusive evidence for it!
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
How do they sleep at night? Really comfortable. They are sociopaths.
It really appears like all this mining for microseconds is a giant waste of resources, and very prone to corruption and mis-use. I see no value in it for 401k folks, or businesses looking to sell stock to fund new ventures.
Why not institute trading on a minute scale? Trades are all resolved between :00 and :01 seconds, and you have 59 seconds to arrange the next set of trades. This would allow a level playing field between humans and machines, and it is hard to believe that trading more often than on a minute by minute basis adds any positive value to the economy.
Looking good, Billy Ray!
It doesn't mean much now, it's built for the future.
So, someone had inside information, but they were sloppy. They thought that placing trades at 2:00 PM was fine, but they didn't account for the delay of light.
Either that, or someone has a working neutrino communication system, so they can go through the Earth, not along its surface.
My bet would be on the former, and I wouldn't be too surprised to see some people go to jail over this.
That's what comes of not having a physicist on your criminal team.
(posting Anon as I modded thread, bucc5062)
/. day), but even in the comments there is no mention of who dunnit, The 600M had to go somewhere, to someone and from that I would figure a good starting point.
,when the reality seems to be more colorful with some depth (and lousy reporting). Okay, I'll go read the article.
It would seem to me that a trade of this size, even at the speed in which it was made would have a identification trail attached in some way. I did not read the article (typical
1 - was there a crime committed? If so then somebody in the Fed or FBI would be starting an investigation (was that brought up)
2 - if no crime then while cool, it seems a non-issue so why all the noise?
I realize life is not black and white, but in a news story like this, the presentation makes it seems like "something bad happened" by unknown people
Catherine Zeta-Jones in a catsuit.
It might take 7ms for signals sent over fiber at 2/3 c via non-direct route...
However a pre-programmed bit transmitted via radio signal can propagate in 3 ms.
Given extraordinary lengths and expense HFT folk have been willing to take it seems logical that someone would do/try it.
is money - Ben Franklin
I'm sure that The Fed and Goldman Sachs having essentially revolving doors connected by a short hallway has nothing to do with it.
I am so glad that when corporations couldn't be bothered to honor their pension promises to employees the IRS came up with the bright idea of allowing 401ks so we can all gamble our retirement life savings away in the stock market.
The difference between 1929 and 2008? Not nearly enough bankers jumping out of windows. Maybe someone should start pushing them.
I remember watch this documentary about the Super K Computer in Japan with about 50.000 Hard drives and countless overclocked processors.Anyways this computer was doing thing never imagines with these super computations,one part in this documentary spoke about unnamed company using this technology to reap the most from the markets.Buying and selling huge lots of stocks and bonds in milliseconds.
Radio transmission delay is 3.2 ms. It required transmission of a few bytes (single data bit with "huge" security overhead).
956 km / 300 km/ms = 3.2 ms
http://www.mapcrow.info/Distance_between_Chicago_US_and_Washington_US.html
Kilometers: 955.76
https://en.wikipedia.org/wiki/Speed_of_light
299,792,458 m/s
What if there was a guy named Beeks that had the report in his briefcase and traveled to the exchange in advance of the public announcement, and there were 2 men and a woman that intercepted the report and used it to their advantage while swapping it with a fake report which was given to the original people?
Signal in copper travels about 98 pct of the speed of light in air and light in fiber travels about 66 pct. Copper is faster not taking into account any latency in amplifiers.
thanks, slashdot, for giving my my recommended daily allowance!
"For security reasons, we firewalled NTP" ? :p
Leaving dissatisfied. ;(
People knew the taper wasn't happening weeks beforehand, without any insider knowledge;
http://www.youtube.com/watch?v=Tak9ODlBJgM
Is this information released in a machine comprehensible format? If not, then there would be additional time for a person to communicate the information to a computer. This might be as simple as a single keystroke, but that still takes about a second to do.
Are we sure that there isn't something more to the story than a simple 7 ms?
-1 disagree is not a modifier for a reason. -1 troll, flaimbait, redundant, overrated are NOT acceptable substitutes.
High frequency traders are using quantum-locked communications!
Get free satoshi (Bitcoin) and Dogecoins
I had my SLV hedged with some puts, which had increased on value over the past several days, due to anticipation of taper. Speculating on the possibility of surprise, I traded them for a spread in the near week options. The puts were January '14, so the trade actually resulted in a net credit.
Next, the surprise. This caused my weekly call options to increase in value *dramatically*. Score 1 for me.
Now this isn't all roses, because my other hedges had to be put back in place--I'm long SLV, but short Jan '14 20 calls and I don't just want to let that run naked. I won't bore Slashdot with the banality of hedging these positions. The whole affair has gotten me some cash back from selling calls against SLV--in fact, I started with 1000 shares and now have 1100 due to the strategy of selling vertical call spreads and using the cash it generates to buy more shares.
With a little luck (yes, luck, it's gambling), the year will end with me ownint 1200 shares of silver--a 20% gain in terms of silver the past couple years; but an unrealized dollar loss. Then, I wait a bit to see if SLV rises to the point where I'm willing to sell a vertical call spread and use the premium to buy some OTM puts so I can sleep well.
This is a very conservative, albeit somewhat complicated option strategy, and if the SEC ever audited me they'd see I'm not dirty. The fact remains though, I made the right trade a couple hours before the news, simply because I thought it might be prudent to exchange the time value on my puts for some cheaper near-calendar options.
2pm in Washington is not 2pm to an observer in Chicago. The concept of NOW is relative to the observer. There is no breaking of the laws of physics here and no proof of insider trading.
Fixed that for you. (And I don't mean "For The Win".)
Of course, this hack isn't even new. There's the value of delaying a radio broadcast was documented in the movie The Sting. And before that there was the Count of Monte Christo who did a man in the middle injection of fake tweets into France's Semaphore packet system to ruin a banker.
I would assert that High frequency trading is simply parasitic. Many people have suggested a transaction tax could fix this. It would damp the frivolous trades yes, but it would not fix these mega scale singleton trades that can happen like this.
my proposal: What one should do I think is fix this by injecting random delays into the trading system itself. That is you would queue up all trades for the last 100 milliseconds into a block. Then randomize their order. then execute the trades in that new order. This would erase any value of a trade that depended on beating another trade by a few millisconds. You'd still have some edge cases to worry about (i.e. racing to be in the block before the next block). But you could fix that too (dither the interval size between 80 and 120 milliseconds at random, so no one would know where the block boundaries were.
For this to be viable enough people would have to agree that HF trades have no actual value added. Additionally, one would have the potential problem of exchanges popping up that did not honor this. But those would not likely have enough liquidity to matter.
Some drink at the fountain of knowledge. Others just gargle.
Was it Aaron or Abe?
If it's such a big problem how about you announce it at 4pm when the market is closed?
Seven puppies were harmed during the making of this post.
It sounds as if news services could have released it at exactly 2pm in Chicago without breaking the Fed's rules. The rules say "public use."
I often work with material under a press embargo. If I get something on Tuesday with an embargo of 2pm EST Wednesday, that means I can send it to my editor in Chicago (or anywhere else) on Tuesday. That's not public use. My editor will wait until 2pm EST and release it (for public use) at that time in Chicago.
FTA:
Transmitting them to the news service's own computer system in Chicago isn't "public use."
"No public use" means you can transmit your story to your editor in Chicago, who holds it until 2:00:00 pm EST and releases it immediately in Chicago.
That would be an unusual news story. It would consist of 1 machine-readable bit meaning "buy." But that's all their readers need.
Quick, everybody, you've got 7 milliseconds to mod me up to +5 insightful.
The industry standard for high frequency trading is 3ms. They have these crazy algos reading news in real time, making predictions, and performing end to end execution in 3 ms. That's your economy on crack. They should end it all.
Apparently, the quants have put their physics expertise to good use. Unfortunately for the rest of us, it's worth more as a trade secret than as a generally available technology.
The "computer" is not going to make a new repair to fix damage done by an investors faulty logic.
All trades should be executed with a random delay between 5 and 30 seconds.
-- "Oh. This guy again."
If someone was expecting one of two outcomes, they could have done the math on both of them. If I make this trade what can I win. They placed the trade not knowing the outcome. But they had a cancel order (or reverse order) ready to go. If the news was not what they expected, they could have canceled it with minimal losses. Buying a lot of gold and the market doing nothing on the FED's news would mean that they could sell it back without much market shift.
I know this is what happened because I did stay at a Holiday Inn Express last night.
Im a gamer, not a grammer major. This post is full of spelling and grammer mistakes.
nothing mysterious here except why this submission was accepted but mine never are.
As someone who makes a good part of my living trading bonds, there's a lot of misinformation here.
1) There is no such thing as "insider trading" in treasury bonds or their futures (or commodities futures or foreign exchange or options on any of the above). The reasoning is that the majority of the participants in those markets are knowledgeable insiders. Corporate bonds are a grey area but no one has ever been prosecuted and numerous people have openly traded on insider info. The SEC brought one case related to trading on credit default swaps, but it didn't go anywhere. Insider trading on stocks and stock options is illegal by case law.
2) if you had information about the Fed's future rate policy, you could make you bet in the spot or futures markets well ahead of the announcement. You would get a better price on your bet by doing so assuming it was a large bet, because markets tend to thin out before announcements (for technical reasons irrelevant to this discussion - just know it happens reliably).
I would guess the most likely explanation here, as with most apparent violations of the speed of light, is poor clock synchronization or other measurement issues.
And my sources inside the Treasury agree.
They only care about jail when it's the 99 percent, not the Masters of (Theft in) the Universe.
-- Tigger warning: This post may contain tiggers! --
Tachyon Control Packets running over Internet Protocol version 8 sub-ether.
-- Tigger warning: This post may contain tiggers! --
There's always aftermarket (which used to be when I bought/sold most things).
Additionally, this would then spike out the Aussie and Japanese markets, and the latter are particularly sensitive these days and could start an Asia-wide trading spike that would magnify the effect much more than it should be to such "news" (if lack of news is news).
-- Tigger warning: This post may contain tiggers! --
Could it be that investors' trades, made in NY, get to Chicago faster than the Fed data does, via one of the dedicated dark fiber lines and microwave transmission networks boasted by the likes of Spread Networks, McKay Brothers, and Tradeworx? They are able to shave off many millisecs compared to conventional methods.
http://www.wired.com/business/2012/08/ff_wallstreet_trading/2/
If I spent $2 on my credit card; it would be easy to track me down. If I walked into a drug store and spent $2 in cash, the security cameras would record who I was.
Why don't we know who made this trade?
In idiot, the Woosh. is implied. .... Awwww", for a car alikeness.
or, "Vrooom, vrooooooooooOOOM. Weeeee! Ka-POW
In the U.S. of A. the term "insider trading" applies only to share/stock trading, where it is illegal.
Those not trading stocks - such as commodities, bonds or spot FX need not concern themselves with such nonsense. Trading on material non-public information is perfectly legal in those markets.
How does one steal milliseconds from a country's central banking system?
I guess time really is money.
You may notice a huuuuuge grin on the face of one George Soros.
No brain, no pain.
Washington DC to Chicago has a distance of about 595 miles. Light travels 186,282 miles per second. That is 3.19 milliseconds. The article keeps saying 7 milliseconds. What am I missing here?
Okay ... from the article here http://www.cnbc.com/id/101056168 it says:
"Print reporters were told they were allowed to open a phone line to their editors at headquarters offices a few moments in advance of the hour, but not allowed to interact with people on the other end of the line until exactly two p.m."
So print reporters are not allowed to 'interact with people'.
Lets piece together how this could have happened, and still been in line with the Feds likely flawed lockdown procedure in the information age.
1) Print reporters working for low latency trading services pre-submit their stories, without interacting with people, and these stories get distributed
to servers in Chicago and New York, ahead of the 2pm release time.
2) At exactly 2pm, the news services spew the 'actionable, summarized' story info out to the world, which already has orders placed to act upon the information ... buy if market going up, sell if market going down.
3) Speculators have orders placed far ahead of time, that go into effect at exactly 2pm, with tight stops, such that, 1 order that will be profitable from the news is held, while the other offsetting order that will lose from the news closes at market immediately. Traders who do this, pay the slippage between the 2 orders as a premium in order to profit from the larger upward move of the profitable order.
4) As the new orders and previously placed orders all execute, it causes the spike in market action / trades we all see.
The flaw in the process here is not the market, and grandmas retirement account is safe, as they are managed on much larger time scales.
The flaw in the process here, is that the Fed gives people access to the info ahead of time. They should release the info, out of a single mans mouth, from a podium, in front of all the news services, and the reporter who types the fastest wins.
If this story is indeed about a single conspiracy as it seems to imply, then the trading logs will show who that single person is. But, this is doubtful.
This appears to be normal, volatile market action, that started 7ms sooner that it should, because the Fed releases info early, and its lockdown rules are flawed.
Isn't it called betting? I'f I bet the Carnidals would win the world series days before it happened, I would except to make more money then people who bet after the world series was over. I didn't require first hand knowledge that they would win, I just sank the GDP of a small country into it and hoped for the best.
There's a record in many places now that I took a shit at 2:34 pm this afternoon because my cell phone went to the bathroom and sat there for awhile. Don't tell me there's no record whatsover of this transaction - no IP's, no logins, no accounts, no record of transfer, no trace at all? This has noting to do with speed of light or 7 ms, it is clearly about someone greedy trying to be clever and using information that they shouldn't have yet but did and thinking no one will notice. An announcement can't be received and understood and acted on in less than 7 ms, it's similar to Lt. Gov. David Dewhurst of Texas taking a vote after the deadline and then having the timestamp changed after the fact hoping no one would notice. So, who is it? Let's put a name on this!
This is simply a case of entangled photons, one in DC and one in Illinois, reacting to each other instantly.
http://en.wikipedia.org/wiki/Superluminal_communication
Bram Stolk http://stolk.org/tlctc/
As little as a case of insider trading would surprise me here --and the possibility really needs to be investigated-- there is a non-cheating explanation.
Apparently, guessing *against* commonly expected outcomes, such as the Fed's move on the interest rate here, can often be a position that is relatively low-risk and high-reward. If common expectation had been correct, the trades will result in a loss, certainly, and this has to be mitigated. But if the counterintuitive position is correct, and your position is the first one to be right, you can win very, very big.
Insider trading is undoubtedly possible. However, I find it suspect that a person with both the inside knowledge and access to both the information AND HFT would also overlook such a fundamental tell off an otherwise very well-planned and executed fraud.
I'd prefer a heartbeat system. All the trades submitted between 12:00:00 and 12:00:05 are collected and processed and the results released at 12:00:06. Repeat every 5 seconds.
(I use 5 seconds for illustration purposes, I have little idea what the appropriate cycle period would be.)
Quattuor res in hoc mundo sanctae sunt: libri, liberi, libertas et liberalitas.
If (and only if) the trade occurred before the light-travel time from Washington, then (by special relativity) there exists a reference frame in which the trade occurred before the information was released in Washington.
It would be so fun to see this argument play out in court.
Quattuor res in hoc mundo sanctae sunt: libri, liberi, libertas et liberalitas.
they love $ and the little girls
Your flame is pointed in the wrong direction! 1. Who the hell cares if some high-power bokerage shaved a few cents off the cost of a big transaction. Is that going to affect the unemployemnt rate or anything that you ranted on about? NO! If anything, some of those transactions actually made some money for some auto-workers retirement funds. Great! 2. Regarding your rant. How does someone making large amounts of money equate to kicking the poor? There is no mandate that rich people who use their wealth, political power, and intellegence to make more money are evil. In fact there are many who try to do good for their community. Of course their are some that abuse that power as well. The modern age has made educated people much more able to reap the benefits of that education. 3. Re: great empires fall. It's not just the elite that dont give a fuck about the poor. The poor dont give a fuck either. Just look at the voter regestration percentages. Only 57% of voters regestered in 2012 in the USA. Almost half of americans dont even care enough to decide their own fate. "Whateva" should be their motto. Reading the propositions and the candidate bios is just too much work! Its easier to just collect my unemployment check. Further proof: after 2008 financial crisis, what luxury did americans give up last? Their cable TV. Comcast shares went down, but their customer base just kept going up. Hey americans want their MTV. And that shit is expensive! Some plans rival a new car payment. -Walmart is another good example. Walmart did not brainwash people into buying their products. People flocked there because all people care about is me me me and the biggest TV they can afford on their credit limit. They didnt care if the as-seen-on-tv products really work, only bthat they saved $10!. They dont care if their imported vegetables were grown according to EPA standards cause they are only 99cents a pound!. 4. So yeah, the USA is in a downward trend, but thats to be expected, normal, and is even good in some respects. We made a ton of money by innovating, engineering factories and having a cheap labor force. We amassed a huge amount of money and have the luxury of buying many imported goods that no one else has access too. Now our currency is trading high so it makes it imposible to compete on manufactured goods. That is a great opportunity for other countries. Yeah some trade tarriffs wouyld have been nice to slow the decline but hey people want their cheap toaster, so everyone welcomed the 'free trade agreements'. yay. But things will normallize eventually as other countries become wealthy and start buying some of our stuff. Yeah it will suck for amny people but there is still a ton of opportunity in the US. It is still one of the best for human rights, infrastructure, environmental protection, and healthcare. I love this country and we should try to help each other personally, financially, or politically. Many ways to do each that accomplish more than raging about the rich.
oldhack: "Security is a waste of money until shit hits the fan. 5 minutes later, it becomes waste of money again. "
The QE3 effort AND this obvious leak are serving to line the pockets of the rich. SOMEBODY in Chicago walked away with a bit of cash in this deal, and just like the Quantitative Easing 1, 2 and 3 lined the pockets of the upper class. It is the policy of this administration to pay off their rich supporters, even though they SAY exactly the opposite.
Must be a sickness with the democrats. Remember Hilliary's miracle options trades when she made 10X the possible return on her investment in a day? Whitewater? Yet these are the same people who trot down to the Occupy Wall Street camp and act like they are somehow part of the common man, when they have used their office and political power to become part of the 1%.
I remember several years back, someone was working on running a new fiber cable between Chi and NY, that was a literal straight line. Or as straight as absolutely possible, in order to shave milliseconds off of communication times between the cities.
http://www.forbes.com/forbes/2010/0927/outfront-netscape-jim-barksdale-daniel-spivey-wall-street-speed-war.html
I'm sure the race to shave times hasn't slowed, since 2010.
"Politicians are interested in people. Not that this is always a virtue. Fleas are interested in dogs." P.J. O'Rourke
My first guess:
With news like this there is probably a small amount of illegal embargoed-knowledge trading in the hours or minutes beforehand. This isn't enough to trigger an alert but it could be enough for someone to notice.
Another possibility:
Someone guessed the most common ways the announcement would be phrased based on possible meanings, and was able to make a fairly-accurate guess what the actual announcement would be before it was clear to the average listener what the announcement really was.
A third possibility: Quantum entanglement so the information "travels" instantaneously. OK, probably not this year, but in a year or two, that would move to the top of my list.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Put the conspiracy theories away. This is simply a problem with server time syncronization. Everyone sees the word 'atomic clock' and assumes perfection. Precise time sync is a non-trivial problem made more difficult by cheap servers which drift. It would not be surprising at all that one (or more) of the news room servers was out of synch.
Further - why is everyone assuming that Chicago has the correct absolute time stamps on these trades? Again, time sync on multiple servers. Does anyone even have the error bars we are working with? Didn't think so.
Seems there should be an obvious way to determine what happened here.
Simple: Add a randomized delay in the 100 second range before the order goes into the market and add a significant transaction tax. And do not allow any mis-trades to be retracted after that delay.
Ultra-fast trading is basically a fraudulent scheme were actors hope to gain advantage in a technological weapons-race. Nothing is produced, the gains are not justified in any sense and the whole thing has a destabilizing effect that is a real danger to society.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
The players have done their work for the day.
My ism, it's full of beliefs.
You are a tool.
Shoes for Industry. Shoes for the Dead.
Where do you get the 7 millisecond figure from? http://www.wolframalpha.com/input/?i=distance+from+washington+d.c.+to+chicago+%2F+speed+of+light+in+fiberoptic+cable says it's 4 milliseconds from Washington, D.C. to Chicago by fiberoptic cable.
Thanks god I didn't trade my 100 shares at before or right after 14, I would've been considered as insider trader as well.
If there is a "culprit" it is most likely AlphaFlash (http://www.alphaflash.com/). They offer the lowest latency access to economic numbers in NY4 in NYC and Aurora in Chicago. Or there was clock skew. Many clocks in the world don't run on PTP.
Right after the event it was just millions. Then few days later - hundreds of millions. After that, about when slashdot and washington post got interested, it became "billions". Criminality level has obviously skyrocketed. On top of that, they obviously messed with the light speed. Somebody has to pay for this.
Could the individual or individuals in questions not have been in Washington but trading in Chicago? People do that kind of thing all the time. While it may be an advantage in their favor there isn't a thing that says they can't do that.
Co-location of servers, high frequency trading, volume incentives paid by the exchanges to high frequency traders, order book stuffing followed by a 99% cancellation rate. If anyone but the insiders did this, they would be in jail. Can someone seriously explain to me the difference between what the proprietary trading desks do and what the Hunt brothers did when trying to "corner" the silver market. These guys should all suffer the same fate as Gordon Gekko.
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billions were traded in those milliseconds? whose billions? who gained and who lost in these trades?
Expose and block cheating by randomly delaying the announcements by milliseconds. Good news is they'll find the perps by threatening RICO.
If anyone thinks that milliseconds and even MICRO seconds don't matter in financial trading, they should check out the fascinating Radiolab story here: http://www.radiolab.org/story/267195-million-dollar-microsecond/
How about you make your decision and announce after the market it closed? The way it is now seems to be designed to give unfair trading advantage to people with better communications. ( I wonder if it has always been this way )
Y'all are funny. It's called "guessing". Trader made a guess that the fed decision would go his way, and he was right. If he was wrong, no story. He didn't stand to lose all that much money (relatively speaking), so he made a bet, and won.
Sometimes smart people (like you all) think too much.
I think you're right that the information got out ahead of time.
The scenario does, however, present an interesting question as to whether the information was non-public at the time of the trade. It's definitely arguable both ways. The cornerstone of the issue is if the information was "nonpublic" at the time of the trade.
Katten Muchin has a nice summary (http://www.kattenlaw.com/Insider-Trading-A-Primer-10-26-2009). They state, "Information is non-public until it has been effectively communicated to the marketplace. One must be able to point to some fact to show that the information is generally public." The standard is not whether the information could have reached Chicago in time, because we don't ask if the information is "fully public," but instead if it is "generally public." Possible knowledge in all of DC, Baltimore, and NOVA is a wide enough population to be generally public.
On the other hand, the standard of distribution often includes enough time for the "public" to absorb the information. No doubt the information was out well a head of time, but in judging public availability --- in 2ms was there enough time for a computer program to even interpret the text of the speech to determine if tapering was on or off? Likely not.
Anyhow, I just thought it was interesting as to whether the information was public/nonpulic 2ms after the release.
Seems like if you put in a random delay to every market transaction then you would make it much harder to do these sorts of things. I'm thinking each transaction would take a minimum of 1 second plus up to 3 seconds randomly generated using a secret key.
Not yours.
The reasoning and facts behind this are a bit subtle, and certainly counterintuitive to those of us who've grown up in a world of classical behavior, but that makes them no less iron-clad. Believe me, if communication faster than light (or, equivalently, into the past) were possible through this avenue, we'd be using it already -- subject, of course, to Niven's law of time travel.
Come on folks - its a tweaked version of the reviled sniping software that has killed real bidding on ebay. Milliseconds before the auction closes a magic winning bid is placed. No human intervention required. Just like this "trade", timed & executed by software based on foreknowledge That's discoverable.
Is all that's going to happen. Just more of the same, members of the 1%'s ever increasingly desperate drive to become 1% of the 1%.
What SHOULD happen is extremely simple.
1. Follow the money. It's not hard to know WHO made these transactions
2. Prosecute the cunts with extreme prejudice
Enough blah blah.
Problem solved.
Casteism
http://low-latency.com/article/groundbreaking-results-high-performance-trading-fpga-and-x86-technologies#!
The way "program trading" works, if the authorities dig into this, as they should, they are likely to find that the same traders placed bets both ways, knowing the time of the announcement, and cancelled the losing bet and kept the winning one. It's market manipulation and plain old theft, but since millions of dollars were made it is unlikely that the perpetrators will actually be called to account in civil much less criminal court as they should if the government were honest. The honest traders can't compete in such a rigged market, and we need to take a hard look at whether to allow such bets in markets everyone knows are going up, too, while we're at it.
bastard sniped me.
It was Hiro Nakamura
Put that 401k on Red, it's a sure thing!
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Oooh! Sorry, that's how it goes. The House (and Senate) never loses.
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Place your bets... C'mon, grannie needs a new pension!
I believe it is possible to cancel a trade shortly after it is made. I'll bet the people involved just made opposing bets at the exact moment, delayed by just a couple of milliseconds, that the announcement was made. A few miliseconds later, when the news arrived in Chicago, the losing bet was canceled.