8 ms·

A fast paced stock exchange trips over itself

47 points by tmorton 15y ago

zotz 15y ago
http://www.zerohedge.com/news/bats-exchange-declares-self-help-against-itself http://www.zerohedge.com/news/bats-exchange-declares-self-he...
zheng 15y ago
“My heart goes out to the guys,” said Larry Tabb, the founder and chief executive of the Tabb Group, a financial research firm. “On the biggest day of their corporate history, their own platform backfired.” Maybe I'm just reading too much into this, but this quote makes it sound like Tabb really doesn't understand technology. The platform didn't "backfire", the gods of finance didn't frown upon their venture, their code was incorrect. This could have been avoided if they had found whatever bug they hit before they went live. Don't get me wrong, I also feel bad for them because it sucks to have a technical error cause anything more than debugging frustration, but this was preventable.
- javert 15y ago
  Your interpretation of the word "backfire" is unconventional. Also, you're trivializing the challenges likely faced by the kind of venture. It's not always possible to find all bugs, unless you want to code in Ada and formally verify things with OCaml and are trying to fly a plane. The problem could have been caused by a strange hardware defect, a rare bug in a library, etc.
  - rhizome 15y ago
    To be sure, mucking about on the stock exchanges should earn a closer comparison of QA responsibility to aeronautics.
    - javert 15y ago
      In my opinion, not at all. The stock exchange is an inherently risky market; everbody knows that. The only responsibility you have is to yourself and your own money. That's a far cry from aeronautics.
      - rhizome 15y ago
        Just because an activity has risk involved doesn't mean it should be thrown to the wolves. You might also familiarize yourself with the Just World Fallacy: http://en.wikipedia.org/wiki/Just-world_hypothesis http://en.wikipedia.org/wiki/Just-world_hypothesis
        jaipilot747 15y ago
        Thank you very much for that link. It was a fascinating read to say the least.
        javert 15y ago
        I don't see the connection between the discussion and the just-world hypothesis.
        rhizome 15y ago
        One interpretation is that the JWH means that people get what they deserve. The connection is your assertion that the markets are risky, people should know this, so quality controls are superfluous.
        javert 15y ago
        I still fail to see the connection you're trying to make. I think you're overreaching.
        rhizome 15y ago
        Well yeah, that's what often happens when one takes a libertarian stance.
  - moonchrome 15y ago
    >The problem could have been caused by a strange hardware defect, a rare bug in a library, etc. Or competition, a disgruntled employee, etc. Just speculating but IMO it's a pretty big coincidence that it failed exactly when they did the IPO.
    - bdr 15y ago
      Yes, not to mention the two stocks it failed on.
    - rabidsnail 15y ago
      Their IPO might have caused a spike in trading volume on their exchange, which might have triggered the bug.
      - apaprocki 15y ago
        Check the graph: http://www.nanex.net/aqck/3079-2.jpg http://www.nanex.net/aqck/3079-2.jpg It happened in less than a second.
    - jack12 15y ago
      The NYTimes article says that the initial offering of BATS "would have been the first company to be listed as well as traded on the exchange", and the post mortem currently at the top of http://www.batstrading.com/alerts/ http://www.batstrading.com/alerts/ (no direct link that I can see) says that the A-BFZZZ shard "encountered a software bug related to IPO auctions". I read that to mean that this is the first time they've ever used their IPO-related code in production and it failed badly. So it sounds like it was the normal sort of bug, in their own code, and their own IPO directly triggered the bug.
- delinka 15y ago
  Everything is preventable (or more correctly, predictable) when you know everything about the system. If we knew everything about the quanta of the universe, we'd know when solar flares and neutrinos and alpha particles were going to affect our satellites and other electronics. Since we don't know everything (not even everything about our own creations like stock exchange markets and software systems), it becomes risk management. After writing software for decades, I still have no idea whether these circumstances were predictable let alone preventable, but perhaps they could have spent more time considering the minutia of the system writing more tests or whatever. Yes, the mistake was the fault of the humans designing and implementing the system. But that could be said of any (non-natural, human-made) system that fails. At some point, someone has to decide that code should just be shipped. We're not perfect enough as people to build bug-free systems. Risk comes with releasing "unproven" code. And yes, it's embarrassing when the fit hits the shan in front of the whole world. But I try to avoid becoming one of those jaded people that can't tolerate mistakes on behalf of others nor can admit their own.
  - zheng 15y ago
    I think I came off a bit too grumpy. I full-well know that every bug can't be eradicated before a launch, and I don't hold any ill-will against BATS for it, I was more trying to comment on the persistence of the idea that computers are magic which sometimes rise up to act against their creators. As another comment said, I guess my interpretation of "backfire" is a bit too narrow.
  - dredmorbius 15y ago
    Heisenberg on line 1, or 2, I can't be certain, but he says you're wrong.
    - delinka 15y ago
      Heisenberg doesn't say that we wouldn't have absolute predictability or control if we knew everything. He says we can't know everything. He's correct, but that doesn't negate my statement.
      - 15y ago
olalonde 15y ago
Off-topic but related: I infer from the articles that shares from a given company can be traded on multiple stock exchanges. Can someone knowledgeable confirm that this is right? In that case, why is the symbol for Apple "NASDAQ:AAPL" on Google Finance? http://www.google.com/finance?q=apple http://www.google.com/finance?q=apple
- _delirium 15y ago
  Typically a company's stock has a primary listing on one exchange, but may trade secondary instruments on another exchange, usually in another country, in order to appeal to that country's investors. I'm not too knowledgeable about the details, but I believe the secondary listings are structured as a sort of indirect way of owning the equivalent of the primary listing. For companies with a primary listing on a non-U.S. stock exchange, for example, they may have a secondary listing on a U.S. stock exchange by wrapping their equity in an instrument called an American depositary receipt (http://en.wikipedia.org/wiki/American_depositary_receipt http://en.wikipedia.org/wiki/American_depositary_receipt). How exactly these situations should be analyzed, and what their pros/cons are, seems to be an active area of research: http://scholar.google.com/scholar?q=cross-listing http://scholar.google.com/scholar?q=cross-listing
- deleted 15y ago
  [deleted]
- fr0sty 15y ago
  A stock will have a single "primary" exchange. This is where the stock is "listed" (apple is listed at NASDAQ, for instance). However a stock may be traded at multiple exchanges (BATS, NYSE, NASDAQ, DirectEdge, etc) as well as other market centers. Hope that helps...
- tcas 15y ago
  Yup, there's usually a primary exchange, but a stock can be traded on many exchanges. Years ago people could make money via arbitrage between exchanges. Essentially if stock ABC costed $50 at one exchange, but people were willing to buy ABC at $55 on another exchange, a quick trader could buy the stock at $50 on one exchange, and sell the equivalent on the other exchange for $55, making a "free" $5 without any change in their holdings. Now that we have computerized trading solutions the price difference between exchanges is essentially nil and cannot be taken advantage of unless you have ultrafast computers and access to fiber optic networks.
velus 15y ago
The efficient market has found the true value of BATS exchange at $0.038 per share. :)

47 points by tmorton 15y ago

zotz 15y ago

http://www.zerohedge.com/news/bats-exchange-declares-self-help-against-itself http://www.zerohedge.com/news/bats-exchange-declares-self-he...

zheng 15y ago

“My heart goes out to the guys,” said Larry Tabb, the founder and chief executive of the Tabb Group, a financial research firm. “On the biggest day of their corporate history, their own platform backfired.” Maybe I'm just reading too much into this, but this quote makes it sound like Tabb really doesn't understand technology. The platform didn't "backfire", the gods of finance didn't frown upon their venture, their code was incorrect. This could have been avoided if they had found whatever bug they hit before they went live. Don't get me wrong, I also feel bad for them because it sucks to have a technical error cause anything more than debugging frustration, but this was preventable.

javert 15y ago
Your interpretation of the word "backfire" is unconventional. Also, you're trivializing the challenges likely faced by the kind of venture. It's not always possible to find all bugs, unless you want to code in Ada and formally verify things with OCaml and are trying to fly a plane. The problem could have been caused by a strange hardware defect, a rare bug in a library, etc.
- rhizome 15y ago
  To be sure, mucking about on the stock exchanges should earn a closer comparison of QA responsibility to aeronautics.
  - javert 15y ago
    In my opinion, not at all. The stock exchange is an inherently risky market; everbody knows that. The only responsibility you have is to yourself and your own money. That's a far cry from aeronautics.
    - rhizome 15y ago
      Just because an activity has risk involved doesn't mean it should be thrown to the wolves. You might also familiarize yourself with the Just World Fallacy: http://en.wikipedia.org/wiki/Just-world_hypothesis http://en.wikipedia.org/wiki/Just-world_hypothesis
      - jaipilot747 15y ago
        Thank you very much for that link. It was a fascinating read to say the least.
      - javert 15y ago
        I don't see the connection between the discussion and the just-world hypothesis.
        rhizome 15y ago
        One interpretation is that the JWH means that people get what they deserve. The connection is your assertion that the markets are risky, people should know this, so quality controls are superfluous.
        javert 15y ago
        I still fail to see the connection you're trying to make. I think you're overreaching.
        rhizome 15y ago
        Well yeah, that's what often happens when one takes a libertarian stance.
- moonchrome 15y ago
  >The problem could have been caused by a strange hardware defect, a rare bug in a library, etc. Or competition, a disgruntled employee, etc. Just speculating but IMO it's a pretty big coincidence that it failed exactly when they did the IPO.
  - bdr 15y ago
    Yes, not to mention the two stocks it failed on.
  - rabidsnail 15y ago
    Their IPO might have caused a spike in trading volume on their exchange, which might have triggered the bug.
    - apaprocki 15y ago
      Check the graph: http://www.nanex.net/aqck/3079-2.jpg http://www.nanex.net/aqck/3079-2.jpg It happened in less than a second.
  - jack12 15y ago
    The NYTimes article says that the initial offering of BATS "would have been the first company to be listed as well as traded on the exchange", and the post mortem currently at the top of http://www.batstrading.com/alerts/ http://www.batstrading.com/alerts/ (no direct link that I can see) says that the A-BFZZZ shard "encountered a software bug related to IPO auctions". I read that to mean that this is the first time they've ever used their IPO-related code in production and it failed badly. So it sounds like it was the normal sort of bug, in their own code, and their own IPO directly triggered the bug.
delinka 15y ago
Everything is preventable (or more correctly, predictable) when you know everything about the system. If we knew everything about the quanta of the universe, we'd know when solar flares and neutrinos and alpha particles were going to affect our satellites and other electronics. Since we don't know everything (not even everything about our own creations like stock exchange markets and software systems), it becomes risk management. After writing software for decades, I still have no idea whether these circumstances were predictable let alone preventable, but perhaps they could have spent more time considering the minutia of the system writing more tests or whatever. Yes, the mistake was the fault of the humans designing and implementing the system. But that could be said of any (non-natural, human-made) system that fails. At some point, someone has to decide that code should just be shipped. We're not perfect enough as people to build bug-free systems. Risk comes with releasing "unproven" code. And yes, it's embarrassing when the fit hits the shan in front of the whole world. But I try to avoid becoming one of those jaded people that can't tolerate mistakes on behalf of others nor can admit their own.
- zheng 15y ago
  I think I came off a bit too grumpy. I full-well know that every bug can't be eradicated before a launch, and I don't hold any ill-will against BATS for it, I was more trying to comment on the persistence of the idea that computers are magic which sometimes rise up to act against their creators. As another comment said, I guess my interpretation of "backfire" is a bit too narrow.
- dredmorbius 15y ago
  Heisenberg on line 1, or 2, I can't be certain, but he says you're wrong.
  - delinka 15y ago
    Heisenberg doesn't say that we wouldn't have absolute predictability or control if we knew everything. He says we can't know everything. He's correct, but that doesn't negate my statement.
    - 15y ago

olalonde 15y ago

Off-topic but related: I infer from the articles that shares from a given company can be traded on multiple stock exchanges. Can someone knowledgeable confirm that this is right? In that case, why is the symbol for Apple "NASDAQ:AAPL" on Google Finance? http://www.google.com/finance?q=apple http://www.google.com/finance?q=apple

_delirium 15y ago
Typically a company's stock has a primary listing on one exchange, but may trade secondary instruments on another exchange, usually in another country, in order to appeal to that country's investors. I'm not too knowledgeable about the details, but I believe the secondary listings are structured as a sort of indirect way of owning the equivalent of the primary listing. For companies with a primary listing on a non-U.S. stock exchange, for example, they may have a secondary listing on a U.S. stock exchange by wrapping their equity in an instrument called an American depositary receipt (http://en.wikipedia.org/wiki/American_depositary_receipt http://en.wikipedia.org/wiki/American_depositary_receipt). How exactly these situations should be analyzed, and what their pros/cons are, seems to be an active area of research: http://scholar.google.com/scholar?q=cross-listing http://scholar.google.com/scholar?q=cross-listing
deleted 15y ago
[deleted]
fr0sty 15y ago
A stock will have a single "primary" exchange. This is where the stock is "listed" (apple is listed at NASDAQ, for instance). However a stock may be traded at multiple exchanges (BATS, NYSE, NASDAQ, DirectEdge, etc) as well as other market centers. Hope that helps...
tcas 15y ago
Yup, there's usually a primary exchange, but a stock can be traded on many exchanges. Years ago people could make money via arbitrage between exchanges. Essentially if stock ABC costed $50 at one exchange, but people were willing to buy ABC at $55 on another exchange, a quick trader could buy the stock at $50 on one exchange, and sell the equivalent on the other exchange for $55, making a "free" $5 without any change in their holdings. Now that we have computerized trading solutions the price difference between exchanges is essentially nil and cannot be taken advantage of unless you have ultrafast computers and access to fiber optic networks.

velus 15y ago

The efficient market has found the true value of BATS exchange at $0.038 per share. :)