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Businesses Linux Business The Almighty Buck United Kingdom Upgrades Linux

LSE Breaks World Record In Trade Speed With Linux 452

Posted by timothy
from the linus-mentioned-their-startling-speed dept.
LingNoi writes with this excerpt from ComputerWorld UK: "The London Stock Exchange has said its new Linux-based system is delivering world record networking speed, with 126 microsecond trading times. The news comes ahead a major Linux-based switchover in twelve days, during which the open source system will replace Microsoft .Net technology on the group's main stock exchange. The LSE had long been criticised on speed and reliability, grappling with trading speeds of several hundred microseconds. The 126 microsecond speed is 'twice as fast' as its main international competitors, the London Stock Exchange said. BATS Europe and Chi-X, two dedicated electronic rivals to the LSE, are reported to have an average latency of 250 and 175 microseconds respectively. Neither company immediately provided details. But many of the LSE's older and more traditional rivals offer speeds of around 300 to 400 microseconds. Nevertheless, Linux is now standard in many exchanges, including the New York Stock Exchange."
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LSE Breaks World Record In Trade Speed With Linux

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  • by QuoteMstr (55051) <dan.colascione@gmail.com> on Monday October 25, 2010 @02:18AM (#34009200)

    Trades that happen this fast are only good for further enriching large investment firms that can afford to spend millions on clever algorithms for shuffling numbers around. This speedup lets these companies make even more money without creating one damned thing that's useful to any living person.

    Limit trades to one per second per institution, and while you're at it, add that tiny per-trade tax. Finance should be boring. Let's encourage people to focus on the real economy that operates in the world inhabited by you and me.

  • Software Only? (Score:3, Insightful)

    by ticklish2day (575989) on Monday October 25, 2010 @02:20AM (#34009212)
    Is this improvement purely because of the change in software technology or were there simultaneous infrastructure and process modifications? The article doesn't really say.
  • Gee (Score:5, Insightful)

    by TubeSteak (669689) on Monday October 25, 2010 @02:26AM (#34009242) Journal

    The record breaking times were measured on the LSE's Turquoise smaller dark pool trading venue, where trades are conducted anonymously.

    Dark pools are part of the problem.
    Transparency is critical for a functional marketplace.
    Dark pools only require trades to be listed after the fact...
    Which isn't as useful as it sounds, even if brokerages weren't completing the trades in/across-house, where disclosure is not required.

    Anonymity and secrecy are anathema to a functional market

  • by RightSaidFred99 (874576) on Monday October 25, 2010 @02:30AM (#34009270)

    Yeah, probably to people who don't know a lot about software you've summarized it.

    For the rest of us, we know that architecture matters more than platform, and that barring extremes of performance requirements it also matters more than native code versus non-native code.

    Since this is an extreme range of performance (in terms of latency), .NET was a poor choice - Java running on Linux with the exact same architecture would have performed as badly or worse.

    Fanboys will pretend this means something in the Linux versus Microsoft debate, when in fact it means absolutely nothing other than that whoever implemented their last version was retarded and delivered a horrible product.

  • trade speed (Score:5, Insightful)

    by Eivind (15695) <eivindorama@gmail.com> on Monday October 25, 2010 @02:41AM (#34009304) Homepage

    Trade-speed is irrelevant to investors.

    It's relevant to highly speculative robot-trader algorithms that try to make a profit by arbitraging sub-second timing-issues. But this is a zero-sum game: one trader can only gain $X by taking advantage of timing if other traders lose PRECISELY $X, so to the sum of traders, this is irrelevant.

    Stock-exchanges, make a living trough fees. The fees are coupled with volume, i.e. a broker that has a larger volume of orders, will pay higher fees.

    So lower latency is good for the stock-exchange, neutral for traders on equal grounds and negative for those suckers who play at daytrading. It -does- tilt the table towards those with machinery though, but the effect is irrelevant for traders who aren't extremely short-term.

    In short: yet another reason to invest rather than speculate.

    If you buy and sell 20 times today, each time with the table tilted a tenth of a promille against you, you'll on the average lose 2 promille, plus the fees. This doesn't sound like much, but a trader that does this 200 days a year, will have lost 20% of his profit to the tilted table. (if his flat-table profits where less than 20%, he'd thus run a minus)

    Meanwhile, the investor, who holds stock on the average 5 years, will also lose a tenth of a promille in every transaction, but since he's got 2 transactions in 5 years, that works out to 0.4 transactions/year -- thus his loss relative to the flat table is 0.4 * 0.01% = 0.004% pro year, which is irrelevant.

  • by Anonymous Coward on Monday October 25, 2010 @02:43AM (#34009312)

    Now the LSE can crash twice as fast as its competitors..

  • by dakameleon (1126377) on Monday October 25, 2010 @02:50AM (#34009334)

    I respect your optimism and idealism when it comes to these things, but Index Arb desks are making some of the most effective, near-risk-free profits for the big banks, and it's little wonder the LSE wants to be at the forefront of this market. You don't have to pay a computer a bonus, and the programmers behind this hardly see the same kind of money as the big swinging dick traders who try to spot the macro inefficiencies. Furthermore, the same strategies and speed advantages are used for algo traders to allow big blocks of trades to go through as best possible without shifting the market, making more cash when the trades are billed to the client at a weighted average instead of the true cost.

    But then you don't see these numbers in the breakdown of the Goldmans profit numbers, and you never will. In the casino of the share market, the dealer is helping the sharks fleece the sheep.

  • by NoSig (1919688) on Monday October 25, 2010 @02:55AM (#34009352)
    I can't tell if you are are someone defending your own work to assuage your conscience or a troll pretending to do so, but anyway: There is no value to equalizing prices in less than a second, especially when the "equalizing" you are talking about is really just pocketing the difference. The only value there would be in equalizing prices in less than a second would precisely be to remove the threat that these people pose. Since sub-second trades are necessarily automated trades, they also cannot be doing anything sensible to keep prices up to date as real world conditions change, as that requires understanding the real world which an automated system cannot. They serve only the function of increasing profits for their investors - how little or how much damage they cause in the course of that is what is debatable.
  • by Anonymous Coward on Monday October 25, 2010 @02:57AM (#34009362)

    It was costing them so much to maintain their systems due to support and modification contracts that they just out and out bought an ENTIRE company whose sole product was...trading systems (For about 50 million'ish pounds IIRC).

    In essence they bought a development department lock stock and barrel and it was STILL cheaper than their existing setup.

  • by Idaho (12907) on Monday October 25, 2010 @03:01AM (#34009372)

    Remember that this very stock exchange moving to a purely Microsoft/.NET based solution was widely touted in Microsoft's so-called 'Get the "Facts"' campaign. Microsoft was involved (with Accenture) in the implementation of the project, not just in selling some Windows licenses. So this screwup should really be a PR disaster for them. If Microsoft themselves cannot even get a .NET project to work in places where their Linux-using competitors have no trouble at all (Chi-X is also Linux-based), then that sure looks like a platform in trouble to me.

    Remember that the entire thing crashed down for an entire trading day, something that you can imagine didn't go over well, and together with the high latencies and other numerous problems, was the reason they dumped it for Linux.

  • by bertok (226922) on Monday October 25, 2010 @03:05AM (#34009382)

    I'm willing to bet that this has little to do with Linux.

    It's a great server OS, sure, but lets look at this realistically:

    - the Windows / .NET trading system was based on Windows 2003 and SQL 2000, and was deployed in 2005.
    - the Linux-based system is under development now, to be deployed next year.

    Just based on that, you'd expect substantial performance differences from just using newer hardware. Chances are that the original kit was certified as a part of the solution, and hasn't been replaced since. With all-new gear, I'd expect about 2-3x the CPU performance, and if they're using 10GbE (likely), then 10x the network performance.

    Even ignoring the hardware and the OS, one would expect 90% of the performance to be determined by the application, not the OS. Decisions like writing the software in .NET versus C or Java, or using a special-purpose Java runtime would make a huge difference, irrespective of the OS.

    On top of this, the software stack is completely different, and developed by a different team. Just about every design decision, small and large, will be different.

    To make a fair comparison, you'd have to run the new software on both OS platforms, on the same hardware.

  • by 1s44c (552956) on Monday October 25, 2010 @03:14AM (#34009412)

    Much as I'm sure that Linux will perform faster and with far more stability than Windows in all given applications the parent is spot on here.

    More speed isn't the answer here, less speed is needed. If anyone wants to buy and sell little bits of companies at those kinds of speeds they clearly have no interest whatsoever in the companies they are trading. They can only be gaming the system for unearned gain.

    Investment bankers ( and I don't mean real investors ) are parasites on the capitalist system and anything that enriches them impoverishes someone who works for a living.

  • Re:Light (Score:5, Insightful)

    by Nursie (632944) on Monday October 25, 2010 @03:16AM (#34009422)

    The world of high finance has become just a bunch of racks frantically swapping bits around.

    Yet when it screws up, the shocks are felt everywhere, for some reason.

    Something is sick on this planet, when automated behaviour of electronic systems decide who eats, who can buy a new mansion, who gets a miserably low pension, whose house is going to be taken away and who's going to pocket a billion dollars in profit.

    I'm more and more coming over to the side of those that say the whole finance sector is parasitic in nature and needs to be destroyed.

  • by The Mighty Buzzard (878441) on Monday October 25, 2010 @03:25AM (#34009464)

    The thing is, if people don't have the freedom to be both panicky idiots and greedy fuckers who're happy to take advantage of that, they're not free at all. Freedom is the government leaving alone unless you're screwing with someone else's freedom; only letting you do what's morally right by their standards is the basis for most oppression.

    So, yeah, let them make money off people who aren't as good at stock trading as fast as they like. Doing otherwise would basically be telling them they're not allowed to make any more money because you find the amount they already have distasteful. Pretty much 100% sour grapes.

  • by Sean Hederman (870482) on Monday October 25, 2010 @03:30AM (#34009488) Homepage
    The software was written by Accenture with assistance from Microsoft, so that would tell you all you need to know.
  • by skegg (666571) on Monday October 25, 2010 @03:36AM (#34009500)

    For those who may not know, these are known as trading halts [wikipedia.org].

    What makes me furious is looking over historic share price graphs and observing share prices rise a day or so *before* a company makes a positive announcement (e.g. a huge mineral find, scientific breakthrough, profit increase, etc).

  • by r00t (33219) on Monday October 25, 2010 @03:43AM (#34009528) Journal

    Prices are discrete, quantized, non-differentiable, etc.

    Prices are chaotic and somewhat fractal.

    Going faster does not solve this. Think of sign(sin(1/x)) as x approaches zero; it changes rapidly but this doesn't make it smooth.

    Hourly trades would be reasonable. You get a few minutes to submit secret bids, the exchange gets nearly a half hour to match them up, the exchange gets a few minutes to publish results, and you get nearly a half hour to decide on your next bid.

    There is no reason that the finances of normal corporations and normal investors should be subjected to the abuse of today's stock market.

  • The regulators are not 'asleep at the wheel'. They are playing their historic role of do what the boss tells you, and if the boss doesn't tell you to bust one of the huge firms, you don't. If the regulators are incapable of protecting the small investors, then get rid of the regulators, but don't blame the technology. Your assumption that the market is more volatile today than ever before is weak. Take a look at the Dow in the 30s.
  • by Tom (822) on Monday October 25, 2010 @03:54AM (#34009566) Homepage Journal

    Trading this fast brings the market closer to optimal economic efficiency, where prices at any instant accurately reflect value.

    It might, if the trading were actually being done at the exchange, for market prices. It isn't. Most trading today is only registered at the exchange, but the actual deal is brokered elsewhere.

    Also, the amount of liquidity a market needs is subject to discussion. Do you really need to have a counterpart available this second for a market to work? That is nonsense, the market (the real market, not the speculative one) wouldn't burn and die if you had to wait a second or two or even *gasp* five for a deal to go through.

    Providing liquidity is a valuable role. However, you are ignoring the fact that everyone is in it for the money. If the cost of liquidity, i.e. the amount of profit the high-speed traders extract from the market, becomes too high, the market also suffers. Somewhere, there is an optimal point between the positive (more liquidity) and the negative (the cost of this liquidity).

  • by LingNoi (1066278) on Monday October 25, 2010 @03:56AM (#34009576)

    It might crash but at least it won't have an 8 hour down time like their previous windows based system had. Oh, and you can forget about the imaginary support you'll get with that windows license as the London stock exchange found out the hard way.

  • by hughbar (579555) on Monday October 25, 2010 @03:59AM (#34009586) Homepage
    There's a huge problem with the word 'value' in the above.

    To declare interest, I'm ex-investment banking and not too proud of it. The 'values' and 'derivatives' exchanged are often not mapped to anything happening in the 'real' world [think manufacturing, [useful] services even], however they do have a negative impact on it [factory closures, bank bailouts paid by the taxpayer, for example].

    Try a thought experiment, does anything useful change in 126 microseconds? Bread get baked? Pizza cooked? House built? Seed planted, if you want to get rural and idyllic?

    Incidentally, I'm not against simple futures, for example, they smooth the farmer's year and have a purpose. I am pretty much against most exotic financial derivatives and against short-term [126 microseconds, for example!] 'investment' to use ironic quotes...
  • by The Master Control P (655590) <`moc.kcahsdren' `ta' `reveekje'> on Monday October 25, 2010 @04:09AM (#34009622)
    The idea of government only preventing someone from directly interfering with the freedom of others sounds great until you realize that (1) everything everyone does affects everyone else, so the only way to actually satisfy this constraint is for everyone to do nothing, (2) not only is it possible to harm people through second-order and higher effects, that's the overwhelmingly dominant means by which people in industrialized countries come to harm today, so relaxing the constraint to not directly harming others is effectively useless, and (3) the relationships between cause and effect are, a large majority of the time, of such high order that accurately and objectively assigning blame/responsibility for harm is effectively impossible. The world is vastly too complex to be effectively managed by an idea so simplistic or black & white.

    Absent the availability of a superhuman-class intellect that's both able and willing to solve the optimization problem, we settle for global stability constraints. Stamping out actions whose only tangible effect is to crash whole stock markets so hard the operators hit the big red "Shut. Down. Everything." button sounds like a damn fine constraint to me. Or, "your freedom to be a greedy dick or a panicking moron ends where the viability of the world's economy begins."
  • by Pinky's Brain (1158667) on Monday October 25, 2010 @04:25AM (#34009684)

    The HFT algorithms aren't value based, how could they cause the stocks to accurately reflect value? HFT is a pure arbitrage play, gaming the restricted strategies of long term investors (in some cases legally restricted). Forcing volatility beyond normal variance to try to benefit from stop loss orders is a perfectly valid HFT strategy ... does nothing to make stocks reflect value though.

    HFT has one benefit, increased liquidity, and one downfall, increased volatility. For the moment humans are still the only ones capable of judging value ... the HFT algorithms add nothing there.

  • by wvmarle (1070040) on Monday October 25, 2010 @04:25AM (#34009686)

    This is not about investors. They are barely if at all affected by these fast trades. Investors are people that buy stocks to hold for long-term gains (either dividends or value increase).

    This is about speculators. The people that try to ride the natural fluctuations to make a quick buck.

  • by shutdown -p now (807394) on Monday October 25, 2010 @04:29AM (#34009696) Journal

    So, yeah, let them make money off people who aren't as good at stock trading as fast as they like. Doing otherwise would basically be telling them they're not allowed to make any more money because you find the amount they already have distasteful. Pretty much 100% sour grapes.

    If the only outcome of people trading on the stock market and failing was less $$$ in their pockets, I couldn't possibly care less - just as I don't care about casinos and lotteries.

    The problem is that, when stock markets fuck-up big time (again), the ripple effect is severe enough that the only way to avoid it is to stock up on supplies and bug out to the woods. We've seen this in practice more than once already. Since, in the end, I somehow find my paycheck been affected, I feel perfectly entitled to advocate for stock market regulation.

    Your freedom ends where my nose begins - but, in a working society, we all have our noses stuck into each other's business, so in practice the point is moot.

  • by wrook (134116) on Monday October 25, 2010 @04:32AM (#34009710) Homepage

    As much as I want to agree with you, it's really pure speculation. Projects fail for a huge number of reasons of which computing platform is just one. It might be a PR disaster, but not for any legitimate reason. I daresay it is not impossible to build a decent trading system on Windows/.NET. I have implemented systems in .NET before and while it's not my platform of choice I don't really recall anything about it that should be a show stopper here.

    But while we're speculating, it would be interesting to imagine a project failing precisely because of the hype about .NET. Most good programmers understand that a problem can only get as simple as it can get. After that no tool is going to help you make it simpler. But MS (and virtually all other proprietary tool vendors) promise that their tools can make projects magically simple. The only ones that get fooled into believing this are managers and bad programmers. These are the people who tend to flock to such projects.

    So, it seems possible that a project could self-select itself for failure based on unrealistic expectations of the computer platform they are using. Well, when I say "it seems possible", what I mean is I've seen it happen time and time again ;-) Whether it was the case here, I doubt I'll ever know. Bad programmers usually have no clue why their projects fail (or serendipidously succeed). That's why they are bad programmers.

  • by Anonymous Coward on Monday October 25, 2010 @04:38AM (#34009732)

    Not true the original software being replaced was, the new millennium software originates from malasia

  • by hairyfish (1653411) on Monday October 25, 2010 @04:45AM (#34009748)
    Which specific part of Linux inherently prevents 8 hour outages? Or is this one of those 'Linuxeses R teh awes0me, indows is teh suck' type post?
  • by Pinky's Brain (1158667) on Monday October 25, 2010 @04:52AM (#34009764)

    This is far too sensible to ever happen.

  • by Splab (574204) on Monday October 25, 2010 @04:55AM (#34009770)

    Yeah was thinking the same.

    My database which is running pretty damned fast (general purpose) spends around 30.000 microseconds on simple add/update/inserts (timed from middle-ware calling), having a computer respond to anything in 126 microseconds is down right impressive.

  • THIS (Score:5, Insightful)

    by Joce640k (829181) on Monday October 25, 2010 @05:08AM (#34009804) Homepage

    If you want to stabilize the global economy put a tax on all stock trades. Stocks and shares should be long term planning, not microsecond.

  • by captainpanic (1173915) on Monday October 25, 2010 @05:15AM (#34009834)

    This stupid system makes it possible to earn a massive amount of money by buying and selling shares at the right time. The really stupid thing is that at some point, the money earned with those transactions can be exchanged for real goods, produced by real people.

    People who don't add anything tangible to this world get free money, and can buy goods for it. It's madness. If I hadn't grown up in this world, I doubt that I would ever understand and accept it...

  • by 1s44c (552956) on Monday October 25, 2010 @05:42AM (#34009950)

    I wonder if you'd be saying the same thing if they were replacing Linux with a Microsoft solution. Probably not.

    Of course I would. The problem here is not the OS.

  • *sigh* This again (Score:5, Insightful)

    by Anonymous Coward on Monday October 25, 2010 @05:48AM (#34009976)

    Arguably the most important idea of communism was that workers own the tools of their trade. In traditional sense, this could mean (Marx didn't really go into the details of the implementation) that workers of a factory democratically vote for all the important issues (wages, etc.) and as such the workers benefit from their work (as opposed to one guy at the top pocketing the money) if they do it well... and have to tighten the belt or begin doing something else if they do the job is unnecessary or done poorly. There was more about the utopia that this would lead to, but that was the primary concept.

    It is indeed true that socializing medicine has nothing to do with communism. Socialism means that government owns the production facilities, Communism means that workers own them, Capitalism (In original meaning of the word, not as a synonym for "free trade") means that some other private entity benefits from the people who work for him. The three are mutually exclusive concepts and communism is at least as far (perhaps further) away from socialism than capitalism is. After all, communism and capitalism both rely on question and demand while socialism includes the idea that some things aren't economically feasible but should be provided for the people anyways. Communism is effectively capitalism where workers of a company own all its stock and each worker owns a fair portition (Not necessarily "equal" as people who have worked there longer could own more because of that and it would still be canon).

    Now, Linux is - to some extent - communism. It obviously isn't socialism (no government owns it) and it isn't capitalism (nobody at the top owns it and benefits from the people who work for him) but rather the community (the people who work to develop it) own it, own the tools to develop it, make decisions about it and benefit from their work for it. So, while it is a project, not a economic concept (So you can't say "Linux is communism". Communism is communism. Linux is Linux.), it certainly is based on a lot of the ideas that make up the foundation of communism.

  • Re:Communist Linux (Score:3, Insightful)

    by clang_jangle (975789) on Monday October 25, 2010 @05:54AM (#34010002) Journal
    Ever had to copy large files with Windows Explorer? Linux may have an IO issue compared to FreeBSD (for instance), but compared to Windows it totally rocks.
  • by The Mighty Buzzard (878441) on Monday October 25, 2010 @06:34AM (#34010154)

    You have a very odd idea of what people want out of society but that's off-topic enough I'll let it go.

    As for others actions indirectly, adversely affecting you? That's life. Get used to it because it is never going to change. We're not entitled or promised a safety net and anyone trying to give us one wants our freedom as the price. A bit here and another bit there; eventually it's gone.

  • by rtb61 (674572) on Monday October 25, 2010 @06:38AM (#34010172) Homepage

    So the London stock exchange has updated it's operating system to accelerate it trades, just as it seems likely that laws will be implemented to decelerate trades. It makes logical sense that trades be slowed to a 24 hour cycle to stabilise the global share market a prevent algorithmic stock price collapse or major firms distorting the market electronically with rapid internal trades.

  • by TheLink (130905) on Monday October 25, 2010 @06:47AM (#34010224) Journal
    It's just front-running and other normally illegal stuff by a different name.

    Effectively a tax on everyone else.
  • by gundersd (787946) on Monday October 25, 2010 @07:01AM (#34010284)

    It may be true that nothing useful in the real-world changes in 126 microseconds... however...

    The way I look at it is that 'the market' is like a big complicated electronic system which contains a lot of complex feedback loops (some of them more stable than others). Imagine tweaking a random knob on such an electronic circuit and watching the effects of that tweak ripple through the circuit until it (hopefully) reaches a steady state again.

    Increasing the latency causes changes to ripple through the system in a way that a steady state may take a long time to occur (or may never occur) as market participants end up making decisions based on old data. Sure, it may be easier for a human to observe what's happening but it doesn't necessarily mean things will be any more stable.

    Lowering the latency to trade is equivalent to increasing the bandwidth of the components in the system, helping the steady state to be reached sooner. Yes, in the worst case, this might allow the feedback loops to veer outside the stable region within the blink of an eye, but that's why there are things like safety cut-offs.

    I agree that at first glance it seems that 126 microseconds should be fast enough for anyone, but when you consider the sheer volume of market participants, the mind-boggling number of trades that are executed, and the complex network of relationships between different stocks, I think that having a market that can reach a steady state as quickly as possible under various "tweaks" of input parameters is probably, on the balance, a good thing.

  • by Rockoon (1252108) on Monday October 25, 2010 @07:08AM (#34010312)

    Try a thought experiment, does anything useful change in 126 microseconds? Bread get baked? Pizza cooked? House built? Seed planted, if you want to get rural and idyllic?

    But isnt that the point?

    I would think that an exchange where useful things CANT happen between the decision to buy and the actual fulfillment of the buy would be a desirable one.

  • by Anonymous Coward on Monday October 25, 2010 @08:20AM (#34010634)

    I actually had something to do with their trading setup. They're using "state of the art" technology, which, frankly isn't ready, and that was the real cause of their downtime. Just looking at the shear size of their network forwarding tables immediately clarifies why it crashed, and why it will crash again.

    (IP) Multicast just doesn't work (reliably) in a network of that size, and no OS is going to change that unfortunately.

    Apparently doing anything else is somehow "unfair".

  • by Lobachevsky (465666) on Monday October 25, 2010 @10:22AM (#34011748)

    Liquidity isn't just about there being _someone_ willing to buy or sell; it's about the spread. Do you want to go back to 25 cent spreads from the early '90s? Most spreads today are 1 cent. If you're happy paying 25 cent spreads to get rid of automated traders, I'd say that's a bit like chewing off your arm to swat a fly. Most automated traders make anyways from 0.1 cents to 0.5 cents per share. Comparatively, retailers like E*Trade charge customers $9.99 for trades that average around 400 shares, which is 2.5 cents per share. Mutual funds like Fidelity often charge 1 to 2% management fees on investment, which is 30 to 60 cents per share on a $30 stock.

    Trying to bend the rules of the market to wipe out a segment that makes 0.1 to 0.5 cents per share is silly when there's zero effort concerning E*Trade making 2.5 cents per share, or Fidelity making 30 to 60 cents per share. Professional services like Lime (a high-end version of E*Trade) charge 0.1 cents per share. No one is angry that E*Trade charges 2.5 cents per share while Lime charges 0.1 cents per share? Oh, that's right, because it's "only $9.99 !!"

    That's the irony of all of this. The average person writes of $9.99 to E*Trade but the media tries to get them concerned about "costs" that are effectively 1/20th of that. I put quotes around "costs" because the spreads have come down from 25 cents per share in the early '90s to 1 cent nowadays. So the average person benefited 24 cents on the spread, and is angry that liquidity providers make 0.1 cents per share? Where was the anger in the early '90s when specialists (a cartel of liquidity providers) were raking it in, making 10+ cents per share? Where is the anger now at Fidelity _losing_ our money in 401ks _and_ charging management fees of 30 to 60 cents per share, annually?

    The biggest to benefit from automated traders going away are the Larry Ellisons and other market manipulators who want to buy up companies without "moving the price up." It's all misdirection, trying to convince you and me that we're being hurt. It's the "death tax" all over again. The average person was never affected by estate tax, yet the media convinced us we should be against it, just so some rich jackasses can save money. The same deal is happening now. Rich folks want to buy out the public companies you and I are invested in, cheaply, and stealthily. They don't like automated traders sniffing their actions with pattern matching heuristics and raising the prices (benefiting long-term owners like us).

  • by khallow (566160) on Monday October 25, 2010 @10:25AM (#34011810)

    Try a thought experiment, does anything useful change in 126 microseconds? Bread get baked? Pizza cooked? House built? Seed planted, if you want to get rural and idyllic?

    Yes. All of the things you mention, for starters. I'm being a bit pedantic, but you do any of those activities in a long string of periods of 126 microseconds.

    It surprises me how many people do a job for years and fail to understand what it is they do. You should know what a baker, pizza maker, home builder, and farmer have in common. They all trade. People like derivatives traders take that to the purest level, trading fairly abstract things, but still things with an attachment, however tenuous, to the real world. Nothing wrong with that. The trades themselves don't close factories or cause bank bailouts.

    The real problem is leverage. For example, when you were a banker, how much collateral did you have to put up for your borrowed money? 1 unit per 10 of debt? More? In the real estate securities market, there were apparently people who could borrow 50 units for every unit of assets they had. I can't comprehend that level of foolishness, though I'm sure it make good bank for a time for the people who could get away with it.

    Bottom line, what do you think would happen if pizza makers could get 50 to 1 leverage? I could use the pizza store I owned to borrow enough to build 50 more. I could use my car as collateral for one or more pizza stores (depending how nice it is). In a few months, we'd be up to our eyeballs in new pizza restaurant construction. There'd be incredibly specialized stores catering to the gay, vegan, Hispanic boardgamer.

    And after the bust, when people realize that they didn't like pizza all that much? Pizza would be vilified, an epithet for people who need something to hate. Pizza makers would be scoundrels of the Earth who don't make anything connected to the real world, unlike bread bakers, home builders, farmers, or even the investment banker. Much would be made of their negative impact, such as factory closures and bank bailouts (paid by the taxpayer), for example. Even pizza makers would be self-flagellating themselves over their worthlessness.

    The above is an interesting sociological phenomena, but the lesson boils down to high leverage causes massive fuckups every time no matter the industry, no matter how "real" the product is, and is the number one cause of market crashes and trigger for recessions.

  • by Anonymous Coward on Monday October 25, 2010 @10:32AM (#34011916)
    As Microsoft strives to migrate their core technologies from the desktop onto the Web, so too is their propaganda machine migrating from the established press to the informal social web.

    Microsoft shills are invading social web sites everywhere - in forums, discussion groups, comments to news items, edits to Wikipedia, manipulation of search engines, comments to blogs - posing as innocent participants to promote their agenda and counter wide spread complaints about their shady marketing practises. Even in the comments section of blogs by Microsoft employees on their own corporate site they employ sock puppets to say the things the author felt inappropriate to say directly. They race to place their shill postings at the top spot in the comments section of news and blogs, or perhaps they are given advance notice enabling them to do this where they are a sponsor.

    The evidence is here on Slashdot for all to see, without embellishments from me. What I say here is amounts to only a digest of hundreds of postings by others. A careful investigator can see for himself the evolution of discussions on Microsoft related issues, especially those showing competitors in good light. As one reads from Slashdot's historical record on through to recent times, the evolution of Microsoft's efforts to pervert Slashdot's discussions becomes readily apparent. Microsoft's ambition is to twist internet discussions around a full 180 degrees until these discussions become a platform for propaganda from Microsoft's "Ministry of Truth". A study of the comments of the shills posted here can be cross-correlated with postings on other sites. Their pattern of saturating a discussion with shill postings, and the repeating of mindless memes becomes obvious. Their harassment, ridicule, and suppression of criticisms is designed to intimidated those who would speak out against them. They seek to establish and enforce a discipline of giving Microsoft "fair treatment" and their propaganda the same consideration and respect a real person would deserve.

    In the process they are destroying the social web as we know it. This insidious attack on the infrastructure we rely upon to form our opinions in a complex world has both a direct and an inhibitory effect on free speech as a side effect.

    We must stop this while it is in its infancy. Once it fully established, it will become much more difficult to root out, and other ruthless corporations, organizations, and even governments will want to emulate the success of Microsoft's campaign.

    This is the nightmare vision of the end of the social internet as we know it.

  • by hoggoth (414195) on Monday October 25, 2010 @10:42AM (#34012084) Journal

    You cannot come up with a procedure or technology that will defeat greed.
    One trade per second per institution? They will register 1,000 institutions and have their trades auto-distributed throughout their sub-companies.

  • by TheKidWho (705796) on Monday October 25, 2010 @11:24AM (#34012744)

    For starters, those fans don't make economic sense, but that was never the point. The point is to get the best performance possible.

    The fact is that the replacement of a fan/heatsink with a item that isn't supplied by the systems manufacturer makes no sense and doesn't, actually, get you any worthwhile gain for the money you spend.

    This is just a sign of your ignorance, an aftermarket heatsink will reduce the CPU temperature by tens of degrees. It's the difference between getting a 3.5ghz overclock on air versus a 4.2ghz overclock on air. It's a pretty big difference performance wise, on the order of 20%. As an anecdote from my own testing, my Core i7 920 hits around 90C at 3.6ghz with the stock fan/heatsink while on my Scythe Mugen 2($50 heatsink/fan) it hits 68C at 3.8ghz. For some people that extra 20% of performance is important, for most people it isn't.

    (I hate overclockers - I challenge any overclockers to ring up a significant number of CPU cycles gained by overclocking when you take into account their overall average computer usage. Yeah, you might get a handful of FPS better but the games aren't designed for that anyway so all you gain is stretched textures on a unnecessarily high resolution moving slightly faster than your perception would ever allow you to detect anyway).

    Cool man. Did you ever think that some people do it because they enjoy the tweaking? Some games also require you to run overclocked if you run the game at high resolution(2560x1600) to max out the game. On the i7s with multiple GPUs the issue is very apparent. A lot of overclockers also contribute their spare CPU power to groups such as Folding@Home doing Protein research.

    Expensive fans, heatsinks, etc. do not make economic sense for 99.999% of users.

    Sure, so what? See above.

    Overclocking is the go-faster stripes of the PC world.

    Not true at all, the main reason people overclock nowadays is to turn their $200 CPU into the equivalent of a $1000 CPU. I purchased my i7 920 for only $200 last year and I have it performing faster than the i7 960 which cost $999 at the time by overclocking it. A lot of people do it for price/performance reasons more than anything else. The money saved from purchasing an "inferior" CPU goes into the purchase of better cooling equipment to manage the heat.

    If I want a cooler PC, or faster graphics, or whatever, it tends to be that after a certain point (usually the mid-to-top-end equipment), the returns are so minuscule as to pale in comparison to *ANYTHING* else I might do. I've seen processor overclocking gains that are wiped out (by orders or magnitude) by installing a better antivirus (yes, they were running an AV on their overclocked, behind-the-firewall, games-only machine that was sucking up about 25% of their CPU time but thought that running their systems out of specification by a handful of percent was "worthwhile"), or taking a couple of items out of my startup, or putting the PC so it's not blowing its exhaust air at a solid wall.

    This is true to a point. I recently built a comptuer for my friend to play Starcraft II maxed out, total cost was only $550, miniscule compared to the $2k I spent on my rig and it plays the game nearly as well. However that's not why I spent $2k on my computer. Regardless, why do you assume overclockers are idiots? You'd think most of us would be smart enough to recognize where slowdowns are occuring in our computers since most of us are seeking the best possible performance for the money. Just because your friend is an idiot doesn't mean we all are.

    And when you factor in the extra cost, you really are better off NOT touching a bog-standard off-the-shelf system but instead saving all that money and time you would normally spend tweaking with a) playing the damn game and b) putting the money sav

  • Re:Light (Score:3, Insightful)

    by L3370 (1421413) on Monday October 25, 2010 @01:03PM (#34014432)
    Actually even in Somalia, one of africa's most volatile regions, there is a thriving stock market that is ruining (enriching?) there lives. http://www.npr.org/blogs/money/2009/12/a_pirate_stock_exchange.html [npr.org] Oddly enough, Somalia would be a pure Libertarians dreamland. No taxes, no real government to fuss with, and everyone is free to set up any enterprising business.

    Bonus points if guns are used to make that business even more profitable.
  • Re:Light (Score:3, Insightful)

    by TubeSteak (669689) on Monday October 25, 2010 @02:52PM (#34015908) Journal

    Co-location. A lot of exchanges will let you put your servers in their building. Then the arguments start about who's network cable is shortest and which router it's on. I'm not joking.

    Ultimately, the solution to all this is to give the exchange a heartbeat and to only execute trades on those beats.
    Randomize the queued orders that accumulate between the beats and we can finally kill off high frequency trading.

    Equal access is one of the prerequisites for a perfect market [wikipedia.org]

  • by Tom (822) on Monday October 25, 2010 @04:09PM (#34016876) Homepage Journal

    For an investor with much more at stake, it is easy enough to see how a one-second interval could be make-or-break.

    Seriously? If a one-second price difference can make or break an investor, don't you think that is ample proof that the markets are way, way too volatile? There is nothing left of real price-finding if these differences can happen in those times. The real world doesn't change that fast, and last I checked investments are about real-world things (companies, goods, etc.)

We can predict everything, except the future.

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