[155411] in North American Network Operators' Group
Re: raging bulls
daemon@ATHENA.MIT.EDU (Brett Frankenberger)
Wed Aug 8 10:18:08 2012
Date: Wed, 8 Aug 2012 09:08:27 -0500
From: Brett Frankenberger <rbf+nanog@panix.com>
To: "Naslund, Steve" <SNaslund@medline.com>
In-Reply-To: <2A76E400AC84B845AAC35AA19F8E7A5D0BC1652F@MUNEXBE1.medline.com>
Cc: nanog@nanog.org
Errors-To: nanog-bounces+nanog.discuss=bloom-picayune.mit.edu@nanog.org
On Wed, Aug 08, 2012 at 08:52:51AM -0500, Naslund, Steve wrote:
> It seems to me that all the markets have been doing this the wrong way.
> Would it now be more fair to use some kind of signed timestamp and
> process all transactions in the order that they originated? Perhaps
> each trade could have a signed GPS tag with the absolute time on it. It
> would keep everyone's trades in order no matter how latent their
> connection to the market was. All you would have to do is introduce a
> couple of seconds delay to account for the longest circuit and then take
> them in order. They could certainly use less expensive connections and
> ensure that international traders get a fair shake.
This isn't about giving international traders a fair shake. This sort
of latency is only relevant to high speed program trading, and the
international traders can locate their servers in NYC just as easily as
the US-based traders.
What it's about is allowing traders to arbitrage between markets. When
product A is traded in, say, London, and product B is traded in New
York, and their prices are correlated, you can make money if your
program running in NY can learn the price of product B in London a few
milliseconds before the other guy's program. And you can make money if
your program running in London can learn the price of product A in NY a
few milliseconds before the other guy's program.
Even if you execute the trades based on a GPS timestamp (I'm ignoring
all the logistics of preventing cheating here), it doesn't matter,
because the computer that got the information first will make the
trading decision first.
-- Brett
