Linked by Thom Holwerda on Thu 21st Oct 2010 22:28 UTC, submitted by tux68
Linux "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 record breaking times were measured on the LSE’s Turquoise smaller dark pool trading venue, where trades are conducted anonymously. That network switched over to Linux from Cinnober technology two weeks ago. Speed is crucial as more firms trade automatically at lightning speed, using advanced algorithms."
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ozonehole
Member since:
2006-01-07

I'm glad to see that Linux is so capable, putting Windows-based servers to shame.

That said, these micro-second trading schemes are all about committing massive financial fraud. It's known as "high-frequency trading" and Wikipedia has a page:

http://en.wikipedia.org/wiki/High-frequency_trading

It's a clever way of manipulating stock prices, though a little complicated to explain. Google it for more info. It's become a gold mine for those who run the servers - they are illegally manipulating stock prices and making millions. This is happening big time in both London and New York.

The law should ban high-frequency trading. All trades should go into the queue and wait a full minute before being executed. That would put an end to this.

Reply Score: 2

xaeropower Member since:
2005-12-16

Financial fraud my ass. "High Frequency Trading is accounting for over 70% of equity trades taking place in the US"
If it would be a fraud it wouldn't be so popular but stock exchange is just like gambling it's for losers. The winners are the fatcats whose doing it since 10 years.

Reply Parent Score: 1

rexstuff Member since:
2007-04-06

Day trading may be more akin to gambling (it is almost a zero-sum game, after all), but legitimate investing on the stock market is not. Historically, the market has increased in value by an average of 10% year-on-year. If it's gambling, it'd be like playing a game where E[X]=X*1.1 - good odds, by any measure. And an educated investor can beat the market without too much difficulty. Of course there is risk; there wouldn't be profit otherwise.

Reply Parent Score: 3

rexstuff Member since:
2007-04-06

Sorry, but you're coming across as a certified crazy. You know, like one of these: http://www.youtube.com/watch?v=_c6HsiixFS8

The wikipedia article seems to indicate that there are more positive aspects to HFT than negative ones. Unless you are referring to flash trading? But if so, as the article notes, most major exchanges have banned flash trading, so again I fail to see the problem.

Also, your proposed solution is not the same as the one suggested by the article. The wikipedia article indicates that the proposed regulation would not force the orders to wait until being executed, but would instead prevent the order from being cancelled within the minimum time period. Not delayed, but in force for a minimum amount of time.

Reply Parent Score: 3

ozonehole Member since:
2006-01-07

I see that my post didn't go over well. But I stand behind it. Some of you commenters should have done a little googling before replying. But OK, my mistake for not providing more links (see below).

By the way, if any of you think that I made this comment because I'm "anti-Linux", you've got it totally wrong. I use Linux, and love it. The problem isn't Linux, it's the crooks on Wall Street. The fact that the crooks use Linux (because it's a superior OS) doesn't change the fact that they're crooks.

Yes, HFT does have some positive aspects, as one of the posters above pointed out. But the stock markets (particularly in New York, I don't know about London) are rampant with corruption. Anyone who hasn't heard the term "bankster" by now hasn't been paying attention. These people don't lose any sleep ripping off their own clients.

As above poster also noted, I did propose a solution (putting all trades into a one-minute queue, with whopping big fines for non-compliance). I'm not the first one to think of that, but needless to say, the banksters scoff and say that would be another example of over-regulation. Meanwhile, they've got their second passports and they're filling up their bank accounts in Hong Kong and the Cayman Islands.

So here are a couple more links (along with a few notable quotes):

=====================

COMPUTERIZED FRONT RUNNING:
ANOTHER GOLDMAN-DOMINATED FRAUD

http://www.webofdebt.com/articles/computerized_front_running.php

...called High Frequency Trading (HFT) or “black box trading,” automated program trading uses high-speed computers governed by complex algorithms (instructions to the computer) to analyze data and transact orders in massive quantities at very high speeds. Like the poker player peeking in a mirror to see his opponent’s cards, HFT allows the program trader to peek at major incoming orders and jump in front of them to skim profits off the top. And these large institutional orders are our money -- our pension funds, mutual funds, and 401Ks...

===================================

Goldman Sach’s High Frequency Trading Scam

http://www.investingblog.org/archives/520/goldman-sachs-high-freque...

One of the biggest market newsmakers recently has been Goldman Sach’s high frequency trading program. The automated system is incredibly complex, using data obtained from the NASDAQ and NYSE markets to front run virtually every trade that happens on the exchange...

Edited 2010-10-22 08:58 UTC

Reply Parent Score: 6

rexstuff Member since:
2007-04-06

Sorry, but there just isn't a scam here. The supposed problem, 'front running', requires that an exchange be willing to sell information about pending orders; clearly stated in the Wikipedia article and even admitted on 'Web of Debt', this is a practice that most major exchanges do not allow.

Also, you need to be more skeptical of what you read online, or just find better sources. 'Web of Debt' in particular is lacking credibility. It quotes anonymous sources and people named 'Tyler Durden', uses ad-hominems and describes itself as revealing 'the shocking truth' and that is 'eye-opening'. It's like the National Enquirer of financial news.

Reply Parent Score: 2