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The $440M software error at Knight Capital (2019)
101–110 of 177 posts
Re: The $440M software error at Knight Capital (2019)
#102Earlier quoted context omitted.
The attitude that finance pays more is a leftover from a previous era. 10-15 years ago it was true: the profits from HFT were so also way, way bigger and split up amongst a much smaller group of firms. Now those firms are all in a completely competitive industry squeezing each other for basis points. Meanwhile the definition of a FAANG is that it has an effective monopoly, and these companies are taking in way more m…
Tbf, most of us don't really prefer to be called as HFT's but as Market Makers. Different name, but we still use the same ultra low latency techniques to get the job done.
“The job” being trading securities at high frequencies?
Re: The $440M software error at Knight Capital (2019)
#103Original Post-Mortem: https://www.sec.gov/litigation/admin/2013/34-70694.pdf
Re: The $440M software error at Knight Capital (2019)
#104The incident happened after a technician forgot to copy the new Retail Liquidity Program (RLP) code to one of the eight SMARS computer servers, which was Knight's automated routing system for equity orders. RLP code repurposed a flag that was formerly used to activate an old function known as 'Power Peg'. Power Peg was designed to move stock prices higher and lower in order to verify the behavior of trading algorithm…
So... you're saying the company activated a tool called "Power Peg"... and.... they got f***ed? Well, what did they expect?
Yep. They got... power pegged.
Re: The $440M software error at Knight Capital (2019)
#105Earlier quoted context omitted.
Are brackets different in American English? I'd say the Queen should order a second burning down of Washington but, the way things are going, the locals will probably get to it soon.
One difference is that we don’t have “round brackets” over here, only parentheses. (We do have “square brackets” however.)
I've heard "lumala" or so but most people just say "paren."
Re: The $440M software error at Knight Capital (2019)
#106Earlier quoted context omitted.
But don’t many (most?) US programmers call () parentheses? I assume non-programmers in the US call them brackets? 1.9M results: lisp "parentheses" -brackets 800k results: lisp "brackets" -parentheses I admit result counts are more similar if lisp is replaced with “python” or “golang”, but square brackets come up more often for those languages. Disclaimer: I am searching from google.co.nz, and I presume search result…
In my lifetime, “parentheses” has been the canonical way to refer to () in the US. “Brackets” is an umbrella term that can describe one or all of (), {}, and []. If you’re in a context where only one of the bracket types would normally be used, you can just call them “brackets.” Since many people never really use [] and {}, “brackets” casually refers to (). To disambiguate, you can call () “open brackets”, [] “square…
I've always called the curly ones brackets and the square ones braces.
Re: The $440M software error at Knight Capital (2019)
#107There are several more of these of approximately the same order of magnitude but those firms are able to keep it successfully out of the media.
Re: The $440M software error at Knight Capital (2019)
#108Re: The $440M software error at Knight Capital (2019)
#109at the end .. its just money going from one account to another right? Its not like some physical thing that has perished and cant be brought back. Why is it difficult to reverse the transactions?
Because the people those transactions were with didn’t want them reversed, and there was no rule or law that required it.
Re: The $440M software error at Knight Capital (2019)
#110Earlier quoted context omitted.
Yeah, pay at the big banks is shit really, especially when you consider the utter lack of work/life balance. I left in 2013 making 150k, which was supposed to be supplemented by a ~40% bonus for the level I was at, but each year was "well its been a tough year..." and after getting a token amount one year, and then zeroes the next 2, after working 50-60 hour weeks, I was like I am not only done with this place, but t…
Most quantitative hedge funds and prop trading firms are now following a very tech like culture since they realize now that technology is just as important as the strategies. To get the best engineers, especially from FAANG, they need to have a similar culture otherwise they'll have a hard time getting new hires.
It depends what the strategy is.
Frankly, a lot of what people refer to as "prop trading firms" and "quant hedge funds" on here are just market-makers...they are taking very little to no risk, a lot are just riding the wave of ETF growth. Even the ones that are running alpha, I have heard of a few strategies, and they are largely what you would expect: low-edge, crowded trades (frankly, a lot of it is LTCM-style stuff).
That is why the business has become more tech-like, because actually taking risk is...quite risky. If you are going for alpha, you are trying to hire one guy out of thousands, that person knows what they are worth, etc. It is far easier to hire lots of devs on low wages and do the grunt work jobs that are less lucrative, but don't require being able to actually work out if someone is a decent earner.
Man Group has their own department at Oxford Uni, I think Winton hires people out of their department at Cambridge...Man Group's shaky record is legendary (they are doing everything now that blew them up in 2008), Winton was top tier...not anymore. AQR is another one, although a more traditionally finance quant approach...it all turned out to be pure beta. The hybrid approach of hiring devs or ML PHds to generate alpha has only ever worked accidently.
The firms that have been printing money from quant investing over the past five years have all been traditional hedge funds that incorporated quant methods into a fundamental process. And I expect that will continue because, bluntly, these firms know what the price of a security should be better than some busted factor model.