3 ms·

For those who haven't read "Flash Boys", this a synopsis of the book: Canadian banker Brad Katsuyama notices prices for stocks he is buying change price almost

For those who haven't read "Flash Boys", this a synopsis of the book: Canadian banker Brad Katsuyama notices prices for stocks he is buying change price almost the instant he places his order to purchase them. Turns out that this happens when he places a larger order than can be filled at a single exchange. After some investigation he determines that HFT traders "see" his trade on the local NJ exchange and buy up stock at other (further away) exchanges before said banker can fill his order at the original (lower) price. His solution: Send orders to multiple exchanges but delay the orders to the closest ones so orders arrive at exchanges more or less simultaneously thus defeating that particular HFT strategy. The coil of fiber is the method used to achieve that delay.

davidgrenier 10y ago
My understanding was that they had a software called Thor to generate the artificial delay in sending their trades to the different exchanges. This new exchange uses the long coil of fiber to enable all traders from around the world to benefit from that protection. I'm wondering if they really had to go to that extent to get the speed bump. But hey since shame has yet to force formally verified software on anyone's radar, the long coil will certainly do.
- clarkmoody 10y ago
  The long coil is a hardware solution that keeps everyone honest. I have a suspicion that the financial incentives offered to the exchange to bypass a software delay would be too great to turn down -- especially years from now if the original players are gone. Edit: Oops. Maybe they can bypass the coil for certain orders. Well that doesn't make sense...
mmodahl 10y ago
The book picks up in the middle of the story after the first step in electronic trading has started, but before all participants are on a level playing field. Human market makers at those exchanges are entering their quotes(by hand even). And Brad Katsuyama uses new electronic technology to crush them. Taking their entire inventories and moving the markets against them. The human market makers fight back and make their computers do the market making for them and Brad is hurt because his technology is no longer the best way to trade.

davidgrenier 10y ago

My understanding was that they had a software called Thor to generate the artificial delay in sending their trades to the different exchanges. This new exchange uses the long coil of fiber to enable all traders from around the world to benefit from that protection. I'm wondering if they really had to go to that extent to get the speed bump. But hey since shame has yet to force formally verified software on anyone's radar, the long coil will certainly do.

clarkmoody 10y ago
The long coil is a hardware solution that keeps everyone honest. I have a suspicion that the financial incentives offered to the exchange to bypass a software delay would be too great to turn down -- especially years from now if the original players are gone. Edit: Oops. Maybe they can bypass the coil for certain orders. Well that doesn't make sense...

mmodahl 10y ago

The book picks up in the middle of the story after the first step in electronic trading has started, but before all participants are on a level playing field. Human market makers at those exchanges are entering their quotes(by hand even). And Brad Katsuyama uses new electronic technology to crush them. Taking their entire inventories and moving the markets against them. The human market makers fight back and make their computers do the market making for them and Brad is hurt because his technology is no longer the best way to trade.