Wall Street’s Big Banks Are Waging a Technological Arms Race

Post by dsacco » Thu, Apr 05, 2018, 9:22 PM UTC

osrec wrote: post #20

I personally feel we need to change the way exchanges operate. Too much emphasis exists on speed of execution. We must consider alternative auction formats where speed of execution is not the only criteria for matching an order, as it gives rise to masses of spam generated by a thundering herd of traders as they all try and fulfill the same opportunity.

Post by kilroy123 » Thu, Apr 05, 2018, 9:25 PM UTC

ransom1538 wrote: post #13

chollida1 wrote: post #3

> Bam. Bam. Bam. Dummy trade signals that were supposed to stay within the company’s electronic systems broke loose and slammed into computers at the New York Stock Exchange’s options markets. So many orders crashed through that by 8:44 a.m., safeguards within Goldman Sachs sprang into action, severing the connection between the company and the exchanges. Anyone whose built a trading system lives with this type of fe…

Imagine coming back from lunch, you start to unwrap your sandwich at your desk. Then, your boss walks by and throws your sandwich across the room and explains while you were out your bug caused 440 million dollars of erroneous trades - and the company now no longer exists. https://dealbook.nytimes.com/2012/08/02/knight-capital-says-...

Post by dsacco » Thu, Apr 05, 2018, 9:30 PM UTC

ransom1538 wrote: post #13

chollida1 wrote: post #3

> Bam. Bam. Bam. Dummy trade signals that were supposed to stay within the company’s electronic systems broke loose and slammed into computers at the New York Stock Exchange’s options markets. So many orders crashed through that by 8:44 a.m., safeguards within Goldman Sachs sprang into action, severing the connection between the company and the exchanges. Anyone whose built a trading system lives with this type of fe…

Imagine coming back from lunch, you start to unwrap your sandwich at your desk. Then, your boss walks by and throws your sandwich across the room and explains while you were out your bug caused 440 million dollars of erroneous trades - and the company now no longer exists. https://dealbook.nytimes.com/2012/08/02/knight-capital-says-...

Post by kasey_junk » Thu, Apr 05, 2018, 9:38 PM UTC

parm289 wrote: post #27

kasey_junk wrote: post #25

Earlier quoted context omitted.

Because they don't have to? They don't suffer from the risk... Clearing frequently act like a form of insurance for smaller firms, up to and including asking for killswitches in your trading engines and audits of your risk procedures. But big firms clear themselves so don't have that. Theoretically the internal risk team is responsible for that but those teams are frequently undergunned.

What about a firm like Knight?

Post by kmonsen » Thu, Apr 05, 2018, 9:55 PM UTC

matte_black wrote: post #18

jfoutz wrote: post #11

Earlier quoted context omitted.

Yes, and that's a good scaling rule. the person with $50 dollars is likely clueless and stumbling around trying to figure out what the rules are. The person with $50 billion can do serious damage when they screw up. The rules in place are exactly backwards. the $50 dollar team is held to a high standard, with no affordances. the $50 billion dollar team is part of the club, so enforcers look the other way when they sc…

It is not backwards at all. Corporations are made up of a ton of people, there's no one person you can lay blame on. Some guy fucks up and costs a firm half a bil with a computer error, that's not something you want to just allow to happen. A dude losing $50? Give me a break, his risk is his own. Consider his $50 a small price to pay for learning how things work. And let me remind you, it is a very small price.