back to article The Hound of Hounslow: No $40m Wall Street wobbler

I'm keen on energy efficiency. Some would also describe me as a cheapskate (I'd sue 'em all if I could find a cheap lawyer.) In our living room we have nice (cheap) pair of lined, M&S curtains with a (cheap) solar reflective blind hanging behind on the same hooks, which helps keep the room lovely and cosy in winter and cool in …

  1. Irongut

    "In our living room we have nice a (cheap) pair of line, M&S curtains..."

    Do you also have a book on English sentence structure? If so then you could benefit from reading it again.

    1. Hans Neeson-Bumpsadese Silver badge

      That's not just any old mangled syntax - that's M&S mangled syntax

  2. Nick Leaton

    If you are trading an option series, when the underlying changes by 1 tick, half of your option prices change. You need to then pull the prices, and submit a load of new prices. It is in the nature of the game.

  3. tony2heads

    Feedback

    Software systems that will change the markets they run in should get a feedback analysis; they should be looked at like some sort of servo system which can oscillate or (with positive feedback) wildy run away.

    Position (price), Rate and Acceleration analysis should check for possible problems.

  4. Anonymous Coward
    Anonymous Coward

    If only we could get back to markets being about real value...

    ..based on what the company makes, what debt it has and what assets it owns.

    This algorithmic playing with values to make profit and loss has zero reality with the real world.

    Finance is now just a game on computers.

    1. kraut

      Re: If only we could get back to markets being about real value...

      That's never been what Equity markets are really about. And if it were, they wouldn't work - you need the speculators to provide the liquidity - and at least that benefits most participants.

      Think back how much commission you'd have paid 20 years ago, compare that to now.

    2. Conrad Longmore

      Re: If only we could get back to markets being about real value...

      Putting a transaction tax on each trade would kill HFT dead and re-establish some sanity into the market, IMO. Doesn't make a difference to real investors, but it screws up those who basically screwing up the markets.

  5. Henry Wertz 1 Gold badge

    Hypcorisy

    "Can someone trading from his mum's house on the wrong side of the Atlantic tens of milliseconds away from the US equity exchanges involved (remember that the big boys pay huge amounts to get closer and closer to the exchange, even co-locating ("co-lo") in the same room, shaving precious microseconds off their latencies to trade) can have any effect at all except by accident, or by being allowed to?"

    Exactly. The fact of the matter is, this single trader should have no effect on the markets. And, the other fact of the matter is, these HFT trading systems are well-known to be using exploits in the trading systems, so not only do they get lower latency than everyone else (by being closer), they actually use these exploits to view trades and FORCE their trades ahead of those other trades in the queue! They "provide liquidity" by forcing their trade in the middle, taking away profit from somebody else. In this respect, they are parasites, not a vital part of the market as some claim. They do of course have true trading strategies and so on, but a lot of the "arms race" among them is how to analyze these in-queue trades (that they by al rights should have no access to anyway), analyze those, and force themselves ahead of them in the queue, faster than the other HFT systems.

    So, riddle me this -- if these systems are permitted to continue to use these exploits to take (some of) everybody else's money, why is this guy not allowed to use OTHER exploits to take a little of this money back from the HFT systems? It is pure hypocrisy.

  6. John Smith 19 Gold badge
    Unhappy

    "well-known to be using exploits in the trading systems,"

    These are not exploits.

    They rely on the use of special order types.

    With a separate order sent on every share being traded.

    How the exchange responds to this order tells the organization sending the order IE the HFT company,

    These are not real orders.

    They are in effect "pings" to the market to detect what is going on.

    Apparently there are 150 order types supported by some (if not all) exchanges. These order types would not exist without the express support of the exchanges involved.

    Once you're read "Flash Boys" you realize, this is no accident.

  7. gerdesj Silver badge

    A bridge too far

    When I studied Civ Eng as a precursor for my subsequent career in IT nearly the first thing we were shown was the Tacoma Narrows bridge failure - it's an absolute classic. We were also told how soldiers (probably apocryphal) might break step when marching over a bridge. We had resonance explained in nauseating detail.

    So they only seemed to have done wind tests, a slack handful of basic loading calcs, a static finite element analysis with pretty graphics and forgot rule 1(b). 1(a) is the wind is what'll shake it down, (b) is something else and there are lots of known somethings already and one of them is people - the primary purpose for a foot bridge!

    1. I ain't Spartacus Gold badge

      Re: A bridge too far

      If I had a pound for every time an architect has fucked up a job, because they couldn't be arsed to check with a competent engineer first, then I wouldn't be posting this comment, as I'd now be drinking cocktails on the deck of my yacht...

  8. John Smith 19 Gold badge
    Boffin

    Hounslow to New York distance roughly 3450 miles.

    Or about 27 milliseconds at the 2/3 of light speed inside a fibre.

    It's estimated HF traders need delays of 320 micro seconds or less to work.

    Not in the race.

    Not even close.

  9. Anonymous Coward
    Anonymous Coward

    This says it all

    "Doesn't it strike you as odd that the US is blaming the one person involved who doesn't have a permanent legal team and has never ever made 'campaign contribution' to American politicians?"

    pick on the poor sucker who can't fight back. Makes everyone look good and get closer to their Lawfirm Partnership and Corner Office.

    This is akin to the US habit of suing not only the suppliers of a product but their suppliers (even in some cases the company that cleans the bogs) and their suppliers in product liability cases.

    Make a 10/32 UNF Screw? better be prepeared to get sued by someone sueing someone who used that screw in something that was then used by someone else in something that might have gone wrong.

    Their Legal System is a big part of what is wrong with the USA today.

    Then they had the temetiry to send several hunred lawyers over here for the Magna Carta celebrations!!! It is a wonder that they managed to get there without a thousand class actions being filed.

  10. Anonymous Coward
    Anonymous Coward

    Not sure who I hate more...

    Lawyers or Bankers. Parasitic scum the lot of them.

  11. Lars Silver badge
    Happy

    When things get wobbly

    There is a "science committee" to deal with it.

    https://www.youtube.com/watch?v=lPgZfhnCAdI

    At around 3 min.

    As for the Tacoma Narrows bridge I still wonder if the driver got out of his car alive.

    1. I ain't Spartacus Gold badge

      Re: When things get wobbly

      It's a long time since I studied Tacoma narrows, but as I recall the footage the driver got out of his car with loads of time to spare. What always amazed me about that footage, apart from the "wheee look at it bounce" factor, was how long that bridge survived. By the end it was doing extraordinary contortions and yet still more-or-less in one piece. Until it wasn't.

  12. John Smith 19 Gold badge
    IT Angle

    A note on "Galloping Gerty"

    What finally destroyed Tacoma Narrows was the fact the wind was gusty, hitting it with high amplitude pulses of energy,

    Since narrow enough high energy pulses fourier analyze into a broad range of frequencies this is a great way to find what frequencies a device or structure resonates without having to "sweep" the excitation signal (a variable speed wind is difficult to arrange).

    Which it did.

    Theo von Karman did the analysis on Tacoma Narrows should anyone want to find out more.

  13. Anonymous Coward
    Anonymous Coward

    Umm. Straw man?

    Where has it been said that this guy was a HFT? Hasn't he been quoted as hating HFT's himself?

    As i understand he's been charged with old fashioned spoofing - the equivalent of getting your mates to huddle around your market stall and loudly shout about how awesome your £50 hot water bottles are and how many they are going to buy - that's been around for as long as you had public order books.

    It's illegal because it's not a genuine order and distorts 'real' interst. Doesn't need low latency either.

    1. Fruit and Nutcase Silver badge

      Re: Umm. Straw man?

      yes, IIRC didn't the exchange warn him at a prior occasion not to spoof orders?

  14. John Smith 19 Gold badge
    Meh

    Hmm. I wonder who voted me down.

    So who is the HFT apologist we haven't heard from yet?

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