5 ms·

I love this. This is the ultimate wisdom of crowds hack. Have a thousand people throw in a thousand bucks, each one selects an option play to purchase. Randoml

by jfoutz 9y ago

I love this. This is the ultimate wisdom of crowds hack. Have a thousand people throw in a thousand bucks, each one selects an option play to purchase. Randomly select the purchase. If the play is profitable, keep the money. if it's a loss get the trade reverted because 'a lot of people were involved in the process.' I can make the process as convoluted an necessary to meet your 'no one person you can lay blame on' rule. I think that's a stupid rule, because it's so easy to hack. The more money staked on a trade, the higher the threshold should be to roll it back. More people mean more chances to catch the error, not the other way around. edit also, the corporation itself is the person that takes the blame. if it can't manage itself, it shouldn't manage your money.

aje403 9y ago
....what? Your logic is truly frightening. Are you saying this is a regularly occurring event and that they deliberately did this? Do you have any idea of the scale and complexity and risk of the code they have deployed? This shit understandably happens. There is no "more people means mistakes don't happen" in any organization on the planet. There is no "whether or not who should morally be able to roll back a trade". There is a "hey, we are a customer of your business, we do a lot of business together and I make you a lot of money. We had a once in a blue moon mistake in our billions of lines of code, can you help us out. Other banks are watching and there are plenty of other exchanges to do business with"
- jfoutz 9y ago
  > Are you saying this is a regularly occurring event and that they deliberately did this? Nah. > Do you have any idea of the scale and complexity and risk of the code they have deployed? No. But apparently neither do they. > ... I make you a lot of money. ... With basically every other risky thing people and corporations encounter, the response is "go buy insurance". Usually they're told that by finance guys. But hey, good for them.
- feiofh398r39rty 9y ago
  >we do a lot of business together and I make you a lot of money >Other banks are watching and there are plenty of other exchanges to do business with And the answer to that should be "sorry, if we will roll back your trade, SEC will put us out of business on the fraud charges".
  - traek 9y ago
    Every exchange that I’m aware of has a rule allowing them to roll back clearly erroneous transactions. “Clearly erroneous” isn’t always clearly defined, but it would obviously apply in the GS case (huge volume executed at $1). Nothing about this is fraud.
  - aje403 9y ago
    There is a cosmological reason why you do not hold a position as a financial regulator
thedufer 9y ago
That pretty clearly wouldn't work. A necessary (but not sufficient) condition for breaking a trade typically involves language like "clearly erroneous". Selling an option that is trading in the $100s for $1 (the case here) is probably in this class; trading at the market and then having it move against you is completely different.
- feiofh398r39rty 9y ago
  And the rules defining what is 'clearly erroneous' and what is not is intentionally made vague because arbitrage of this clause makes the exchanges money.
  - traek 9y ago
    In what sense is this “arbitrage”?
    - feiofh398r39rty 9y ago
      They stand as the arbiter of who will gain money and who will lose. There basically is a series of cases 'erroring parties vs Goldman' and 'erroring Goldman vs other parties' and whether Goldman will lose money is decided by an Exchange (hint: they rule in Goldman favor every time, making an analogy with forced arbitration even more proper)
- Applejinx 9y ago
  How do you know the player isn't up to something intentional, for instance triggering some kind of 'outside investors suddenly acquire all of a stock or bond that we think is going to tank in the next five minutes'? Are stock market players not allowed to divest extremely suddenly, to dump their property at fire sale prices in order to get rid of it at what would be a paper loss, all the while knowing the consequences of holding would be worse? What if they're dumping equity in a company that will be known to have committed terrorist acts? I'm not sure if I buy 'clearly erroneous'. I also don't buy that the scale of the error was really threatening to Goldman Sachs.

by jfoutz 9y ago

aje403 9y ago

....what? Your logic is truly frightening. Are you saying this is a regularly occurring event and that they deliberately did this? Do you have any idea of the scale and complexity and risk of the code they have deployed? This shit understandably happens. There is no "more people means mistakes don't happen" in any organization on the planet. There is no "whether or not who should morally be able to roll back a trade". There is a "hey, we are a customer of your business, we do a lot of business together and I make you a lot of money. We had a once in a blue moon mistake in our billions of lines of code, can you help us out. Other banks are watching and there are plenty of other exchanges to do business with"

jfoutz 9y ago
> Are you saying this is a regularly occurring event and that they deliberately did this? Nah. > Do you have any idea of the scale and complexity and risk of the code they have deployed? No. But apparently neither do they. > ... I make you a lot of money. ... With basically every other risky thing people and corporations encounter, the response is "go buy insurance". Usually they're told that by finance guys. But hey, good for them.
feiofh398r39rty 9y ago
>we do a lot of business together and I make you a lot of money >Other banks are watching and there are plenty of other exchanges to do business with And the answer to that should be "sorry, if we will roll back your trade, SEC will put us out of business on the fraud charges".
- traek 9y ago
  Every exchange that I’m aware of has a rule allowing them to roll back clearly erroneous transactions. “Clearly erroneous” isn’t always clearly defined, but it would obviously apply in the GS case (huge volume executed at $1). Nothing about this is fraud.
- aje403 9y ago
  There is a cosmological reason why you do not hold a position as a financial regulator

thedufer 9y ago

That pretty clearly wouldn't work. A necessary (but not sufficient) condition for breaking a trade typically involves language like "clearly erroneous". Selling an option that is trading in the $100s for $1 (the case here) is probably in this class; trading at the market and then having it move against you is completely different.

feiofh398r39rty 9y ago
And the rules defining what is 'clearly erroneous' and what is not is intentionally made vague because arbitrage of this clause makes the exchanges money.
- traek 9y ago
  In what sense is this “arbitrage”?
  - feiofh398r39rty 9y ago
    They stand as the arbiter of who will gain money and who will lose. There basically is a series of cases 'erroring parties vs Goldman' and 'erroring Goldman vs other parties' and whether Goldman will lose money is decided by an Exchange (hint: they rule in Goldman favor every time, making an analogy with forced arbitration even more proper)
Applejinx 9y ago
How do you know the player isn't up to something intentional, for instance triggering some kind of 'outside investors suddenly acquire all of a stock or bond that we think is going to tank in the next five minutes'? Are stock market players not allowed to divest extremely suddenly, to dump their property at fire sale prices in order to get rid of it at what would be a paper loss, all the while knowing the consequences of holding would be worse? What if they're dumping equity in a company that will be known to have committed terrorist acts? I'm not sure if I buy 'clearly erroneous'. I also don't buy that the scale of the error was really threatening to Goldman Sachs.