I worked for the Pacific Options Exchange from 97-02. Ran a pit for about a year. We had this thing called the "Wheel", visible on a tiny TV buried in the sea of screens that covered the markets our LMM (Lead Market Maker) was financially responsible for. Electronic purchase were allow in small amounts (10 lots) every few minutes. But you weren't allowed by law to arbitrage on a single trade. Then we saw him.. His badge number on the screen was B29. We called him the "bomber". This bastard had some sophisticated algorithms, scanning hundreds thousands of strike prices in real time.
I finally caught it one day and did some homework. Had an in house system that gave me access to every trade executed for the prior year. Realized B29 had been buying on the Philly when they were an 1/8 less than us and automaticlly selling it to us to make his spread in the same timestamp. System didn't display fractions of a second. No monder, humans don't work that fast, duh. Bit more digging, I started seeing he was hitting hundreds of other underlining stocks around the floor 4 -5 times a day each.. This guy was making some serious cash by electronically exploiting price differences with an innovative system. We filed grievences with the SEC. Heard he got a slap on the hand, then he disappeared off our Wheel. Sure he got more sly.
Can't imagine how many financial bot networks are running in trading rooms all over the world. The market is already an emotionally based casino drinking it's own Koolaid that it's based on underlining value. The crashes get progressively a little quicker with each round. Will never stop being interesting.
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I worked for the Pacific Options Exchange from 97-02. Ran a pit for about a year. We had this thing called the "Wheel", visible on a tiny TV buried in the sea of screens that covered the markets our LMM (Lead Market Maker) was financially responsible for. Electronic purchase were allow in small amounts (10 lots) every few minutes. But you weren't allowed by law to arbitrage on a single trade. Then we saw him.. His badge number on the screen was B29. We called him the "bomber". This bastard had some sophisticated algorithms, scanning hundreds thousands of strike prices in real time.
I finally caught it one day and did some homework. Had an in house system that gave me access to every trade executed for the prior year. Realized B29 had been buying on the Philly when they were an 1/8 less than us and automaticlly selling it to us to make his spread in the same timestamp. System didn't display fractions of a second. No monder, humans don't work that fast, duh. Bit more digging, I started seeing he was hitting hundreds of other underlining stocks around the floor 4 -5 times a day each.. This guy was making some serious cash by electronically exploiting price differences with an innovative system. We filed grievences with the SEC. Heard he got a slap on the hand, then he disappeared off our Wheel. Sure he got more sly. Can't imagine how many financial bot networks are running in trading rooms all over the world. The market is already an emotionally based casino drinking it's own Koolaid that it's based on underlining value. The crashes get progressively a little quicker with each round. Will never stop being interesting.