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Comment: Re:Fine ... (Score 1) 245

by smellotron (#47208393) Attached to: NSA's Novel Claim: Our Systems Are Too Complex To Obey the Law

Nobody programs fast enough to fill data-centers with 'new programs'.

I don't read that as "new program text" i.e. the storage for newly-released executables. I read it as "storage for [data generated by] new programs," where the new programs are "programs" from a TLA organization's perspective and not individual executables. From that perspective, it is quite believable that the NSA would be capable of filling new datacenters with new programs.

Comment: Re:Too Big to Be Indicted... (Score 1) 245

by smellotron (#47208347) Attached to: NSA's Novel Claim: Our Systems Are Too Complex To Obey the Law

try to explain the intricacies of Java garbage-collection to an equity-options trader...

If that is a problem in your organization, this would probably be a good start: "The equity-options traders that understand the role of technology in their trades will inevitably be eating your lunch."

Comment: Re:How do you make a lego character female? (Score 1) 208

by smellotron (#47185009) Attached to: Lego To Produce Three Box Sets Featuring Female Scientists

You just plainly CANNOT build anything out of the pieces but exactly what you are sold.

Several years ago, I would have agreed with you. Now it just sounds like you aren't looking hard enough, or haven't looked recently—check out the Creator series. Almost all of my newer lego collection is from those box sets, and they are very good about providing reusable pieces.

Comment: Re:and front-running? (Score 1) 382

by smellotron (#47177013) Attached to: High Frequency Trading and Finance's Race To Irrelevance

By continually extracting money from the exchange without injecting value, they reduce the overall value of the stocks... the best solution would be for legitimate companies to not allow their stocks to be traded on exchanges that permit HFTs. It would keep their stock values higher...

This is a weird analysis. HFTs are market-neutral, meaning they are trying to avoid taking any big directional bets. Because they are buying and selling symmetrically, they tend to have very little impact on long-term market prices. Instead, their profit comes from buying low and selling high on average, meaning that they are profiting at the expense of their trading counterparties. At the end of the day, the value of the stock should be unchanged by HFTs. Except when their systems go bonkers, a la Knight Capital.

Comment: Re: Arbitrage (Score 1) 382

by smellotron (#47176957) Attached to: High Frequency Trading and Finance's Race To Irrelevance

Per transaction fixed cost is the way to go if the goal is to discourage frequent trades.

Most transaction taxes discussed are a percentage of the notional value of the transaction (price * quantity, e.g. 100 shares of a $4 stock is $400 notionally). So Sweden's 1% tax could have easily been 1% of the value of the transaction, which is not at all stupid. In general, a transaction tax can be a function of the notional value of the transaction, quantity of the transaction (shares or contracts), or fixed per transaction; and in any case it will discourage frequent trading.

Comment: Re:one device to rule them all (Score 1) 288

by smellotron (#47084391) Attached to: HP Makes More Money, Cuts 16,000 Jobs

You are definitely moving the goalposts, but I will play along. Wikipedia names several products which use Infiniband, mostly for storage (not a surprise that NAS systems want high-bandwidth interconnects). On the HPC side, Los Alamos National Lab has IBM's Roadrunner cluster, which uses Infiniband. Finally, your underlying objection sounds a lot like "640k ought to be enough for anybody." Why wouldn't we want networks to get better? IB may eventually go the way of Betamax (there are other competing low-lateny/high-bandwidth interconnects out there), but even so it is currently providing value and pushing engineering boundaries.

Getting back to the original topic, I don't think HP deserves much credit for pushing IB. The customers whose needs are met by it are probably already working directly with all of the vendors in the chain: IBM or Intel for chips, HP or Dell for the base systems and BIOS, Mellanox and Cisco for networking, etc.

Comment: Re:one device to rule them all (Score 1) 288

by smellotron (#47081209) Attached to: HP Makes More Money, Cuts 16,000 Jobs

please name 2 environments that actually benefited from using Infiniband

HPC clusters and cloud providers. Several financial exchanges (CME, NASDAQ) appear to be in the process of adopting Infiniband, but every reference I see sounds like a press releases from Mellanox and not yet a demonstrable application.

Comment: Re:Lets call it what it is..... (Score 1) 246

What you describe is not arbitrage. Arbitrage would be buying stock on one exchange and selling it on another without knowing jack about the order book.

What I am describing is exactly arbitrage. There is not one order book, there are fourteen order books (one per exchange). When one order book gets cleared out, the arbitrageurs make a bet that the other order books will get cleared out as well, so they take on the position with the hope of now being long at the new bid, or short at the new ask. They do not know that the other books will get cleared out, because they don't know if you wanted e.g. all 22,000 Intel shares, or just 2,000 (which just so happened to clear out 3 exchanges, but not the others).

This is definitely a problem for large executions: you move the price before you are done with your whole "trade". This has always been a problem for executing orders larger than the current top-of-book. It is made worse because there are so many exchanges, but also because some of them are so darned fast that HFT systems can beat brokers' order routers. You could argue that there should be a delay in publishing market data to ensure that routers can compete. You could also argue that it doesn't make sense for fourteen exchanges to exist, with regulation that merely attempts to paper-over fundamental natural laws (simultaneity). But you can't argue that it is not arbitrage.

Comment: Re:Lets call it what it is..... (Score 1) 246

Obviously what they are doing is not illegal as they are still doing it. They are very good at gaming the system.

There exist regulations to establish a "National Market", but the reality is that right now there are 14 different exchanges*, and therefore 14 independent order books to participate in. The HFT that you object to in particular is the style that performs arbitrage among the order books. If you think that arbitrage is front-running, you should start complaining to the SEC about the massive fragmentation in the US stock market which creates this situation in the first place.

* NYSE, NYSE ARCA, NYSE MKT (formerly the American Stock Exchange), NASDAQ, NASDAQ PSX (formerly the Philadelphia Stock Exchange), NASDAQ BX (formerly the Boston Stock Exchange), NSX (formerly the Cincinnati Stock Exchange), CBOE, Chicago Stock Exchange, BATS, BATS-Y, EDGX, EDGA, and now LavaFlow. Notice that's 14 exchanges with three owned by NYSE, three owned by NASDAQ, two owned by BATS, two owned by DirectEdge. Clearly market fragmentation benefits the exchanges.

Comment: Re:Limit order? (Score 1) 246

Front running may be illegal but you don't see many prosecutions for it.

For firms paying for retail order flow, I expect front-running is not worth the risk of getting caught. Why bother front-running when they can just pick which retail orders to be the counterparty against? And if they route the "toxic" retail orders to the open market, they could conceivably generate their own orders and send them after the retail order to a different exchange, and potentially still trade before the retail order trades (violating the spirit—but not the letter—of the regulations). I think it would be hard to build a case against a "well-done job".

Comment: Re:Forbit all HFT (Score 1) 246

Better yet, how about a tiny tiny tax on each trade?

Such a thing exists, but under a different name: SEC Section 31 Assessments amount to a tax on sales to fund the SEC's activities. As market volume is constantly changing, the rate is periodically updated; the current rate is $17.40 per $1 million sold (notional value, so price × quantity). This assessment is applied to all sales, so it behaves as a tax on HFT (half of whose volume is sales on a given day, so they can go home without a position). Right now the rate is only adjusted for budgeting and volume predictions, but it could conceivably be used as a punative measure against excessive trading. If it was adjusted by a large amount, you can expect that market spreads would widen accordingly and total trading volume would drop. I think the rate could probably go higher than the current value without much impact, but there's definitely a tipping point where the "friction" from the assessments would cause major liquidity problems. For scale, consider that a 1% tax on the notional value of all trades would be one thousand times larger than the current Section 31 rate.

Comment: Re:It IS about profit. (Score 1) 348

For example I've heard that the Canadian tar sands oil production requires a minimum price of around $85/barrel to be viable. If we start digging up oil shale it's got to be a lot more than that.

It's worse than that: more exotic sources of crude oil require more energy to extract—potentially more energy than is available in the oil itself! Because energy density is high from crude oil, it may make sense to "waste" energy in extraction because the result is useful as a transportation fuel, and also to stabilize relative prices between energy sources (e.g. spending cheap natural gas to produce expensive crude). But it still means that some energy extraction is a net loss, which is a very bad starting point.

Comment: Re:If Comcast were Exxon (Score 1) 520

by smellotron (#46331353) Attached to: Netflix Blinks, Will Pay Comcast For Network Access

If Walmart wants to buy bread from BreadCo, what are they going to pay for it with? Walmart gift cards? ... This isn't a recipe for a stable economy, it's a mess.

I'm not sure what your point is with all of this. Your argument seems to be "if the US government disappears overnight, things fall apart." But that's not very constructive, because it's based on an extremely thin premise: immediate devaluation of USD to 0; no massive worldwide selloff, just *poof* it's gone. Furthermore, you don't seem to be able to see past the initial messy period. Sure, there will be a large barter economy. But that's not new, people have survived with barter economies in the past! So, something will appear to fill the USD void, and stability will slowly return. Because if it didn't, then we wouldn't be talking about this today. We would be trading goats and ball bearings, and murdering 70-year-old men in suits.

Of course you can't flap your arms and fly to the moon. After a while you'd run out of air to push against.

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