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+ - Charged with frauding a robot->

Submitted by Kanel
Kanel (1105463) writes "Most of the transactions in stockmarkets today, are handled by automatic or semi-automatic algorithms, so-called "stock market robots". The norwegian daytraders Larsen and Veiby successfully carried out a form of social engineering against one of these stock market robots and could now face up to six years in jail.

The two daytraders, who worked independently, placed a number of sell and buy orders onto the Oslo Stock Exchange. For many of these orders, a deal was never completed. The police claim that Larsen and Veiby placed these orders to manipulate the stock exchange and fool a robot owned by US trading house Timber Hill. The police is quoted in the newspaper Dagens Næringsliv saying that the 2200 buy and sell orders carried out from november 2007 to march 2008 changed the robots' impression of the price of certain stocks, something that Larsen and Veiby took advantage of this.

It should be mentioned here that while the stock exchange announce an "official" price on stocks, many stock market robots analyze buy and sell orders in real-time, to predict the next official update from the stock exchange and gamble against this.
Larsen and Veiby claim that they did not manipulate the robot or the stock exchange in an unlawful manner. Nor were their buy and sell orders "fake". The daytraders took an economic risk as anyone could have taken them up on their buy and sell offers.

In this man versus machine lawsuit, commentators rally in support of the two daytraders, who got the paltry sum of 67 000 USD out of their social engineering scheme. The main argument in their defence is that the stock market robots are gaming each other in the same manner all the time. Is something legal when an algorithm performs it at lightning speed and illegal when a human plays by the same strategy? The robots of Goldman Sachs earned the company a hundred million dollars by a similar trading on small margins and got away with it, but when two humans bested a robot at its own game, they were sued.

Several commenters see the lawsuit as part of an ongoing fight to keep small players out of the stock market. Large actors on the stock market move their computers closer to the stock exchange, with direct connections to it, so that their algorithms get a millisecond headstart against other traders when a buy or sell order is announced. While this high-tech is the norm, it appears infeasible, according to commenters, to let everyone in on robot trading. There is no way for say a student or an independent trader to design and connect a robot trading algorithm to the stock exchange and play the same field as the big robots. In Germany alone, 200 000 people is reported to have left the trading arena because of the robots and the preferential treatment they get at the stock exchanges."

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Charged with frauding a robot

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