Oops





  • For a minute, I thought we had unmasked Snoofle's client. Then I got to the part about the glitch "led the firm’s computers to rapidly buy and sell millions of shares...". Key word being "rapidly".



  • I can just imagine the conversations over at Knight Capital...

    "Cover for me."

    "Oh, good idea boss!"

    "It was like that when I got here."

    "It's my first day!"

     



  • @RichP said:

    For a minute, I thought we had unmasked Snoofle's client. Then I got to the part about the glitch "led the firm’s computers to rapidly buy and sell millions of shares...". Key word being "rapidly".

    I honestly can't stop laughing at that. You win the interweb sir! Kudos!



  • @flabdablet said:

    Knight Capital Says Trading Glitch Cost It $440 Million
    Gee, I feel really sorry for them. No, really.

    Honestly... these firms are trying to make money out of basically nothing, and in doing so, rely on computer software that makes decisions at a split second, to buy or sell hundreds of millions worth of financial products. Trying to make as much money as possible by relying on computer software. Darwin would have been proud.



  • @Severity One said:

    Trying to make as much money as possible by relying on computer software. Darwin would have been proud.

    That was basically what caused the stock market crash of 1987, at least according to some.



  • @Severity One said:

    Honestly... these firms are trying to make money out of basically nothing, and in doing so, rely on computer software that makes decisions at a split second, to buy or sell hundreds of millions worth of financial products. Trying to make as much money as possible by relying on computer software. Darwin would have been proud.

    The sad thing is that many will say this points to the need for more regulation, more SEC (Securities and Exchange Commission, which is the US agency that regulates the stock exchanges, etc) or whatever. For some reason, these people think that porn-surfing government bureaucrats who want to someday get lucrative jobs with the firms they regulate will provide greater (dis)incentives against losing hundreds of millions of dollars than, well, actually losing hundreds of millions of dollars.

    The tragic thing is that the abomination that is Dodd-Frank probably has something, somewhere that will allow them to do so. It wasn't so much a law that actually did stuff as a carte blanche for writing new regulations.



  •  @RichP said:

    For a minute, I thought we had unmasked Snoofle's client. Then I got to the part about the glitch "led the firm’s computers to rapidly buy and sell millions of shares...". Key word being "rapidly".

     or thats the reason for the sleeps he had to add. :D



  • i wish i could make money that fast



  • I suspect there may have been some developmestuction going on.



  • I've never worked at Knight Capital, but I have worked on program trading systems. Basically, they try and create AI by using certain rules. If this goes up and that goes down and ... then buy/sell. Like that. The problem is that sometimes, the market can be skittish, and the programs can be fooled into thinking that something is happening because it looks like something might be happening.

    When these systems are first built, they are used with caution, with human traders checking how the system is performing. Once they get confident that they can make money, they open the window of what and how much they can trade without human approval, and let the systems fly.

    Think flash crash. Think skynet.

    Yes, you can make lots of money on miniscule market movements, and yes, only computers can react that quickly, but with the wonder that is computers, you can also fuck up at the speed of light.

    Personally, having seen not only the publicized screwups, but the ones that DON'T make it into the news as well, I think program trading should be banned. Period.

     



  • @RichP said:

    For a minute, I thought we had unmasked Snoofle's client. Then I got to the part about the glitch "led the firm’s computers to rapidly buy and sell millions of shares...". Key word being "rapidly".
    Nice.


  • Discourse touched me in a no-no place

    @boomzilla said:


    The sad thing is that many will say this points to the need for more regulation, more SEC (Securities and Exchange Commission, which is the US agency that regulates the stock exchanges, etc) or whatever. For some reason, these people think that porn-surfing government bureaucrats who want to someday get lucrative jobs with the firms they regulate will provide greater (dis)incentives against losing hundreds of millions of dollars than, well, actually losing hundreds of millions of dollars.

    If you're government, nothing succeeds like failure. If a problem continues, you can claim that you didn't have enough money or power and they'll give you more of both. If it's fixed, you're out of a job.


  • @snoofle said:

    I've never worked at Knight Capital, but I have worked on program trading systems. Basically, they try and create AI by using certain rules. If this goes up and that goes down and ... then buy/sell. Like that. The problem is that sometimes, the market can be skittish, and the programs can be fooled into thinking that something is happening because it looks like something might be happening.

    Where did you work? Roscoe's Investments Group And Pawn Shop? High-frequency trading is much more complex than having "AI using certain rules". Real hedge funds like Renaissance have built hugely sophisticated patterns recognition technologies, which is why they don't hire financial experts, they hire rocket scientists, text recognition specialists, CFD gurus, etc., all kinds of people who specialize in identifying patterns across shitloads of data. Serious software, serious hardware.

    I doubt that the problem at Knight was AI going haywire. It is much more likely a problem with automating the piles and piles of trades that they process for 3rd parties like Fidelity or Ameritrade. It would be a problem in transposing an identifier or a stupid thing like a typo in a batch file and I would not be surprised. A sign of greed as they try to squeeze as much trades as possible during market hours like an automated production line; not some exotic stock picker (which makes it a different kind of WTF)

    It's like saying: I ordered Mein Kampf on Amazon and I received a Danielle Steel novel instead, the Amazon website has become self-aware!!!! while it was just the mexican dude paid 3$ an hour in their warehouse that messed up.



  • @Speakerphone Dude said:

    I doubt that the problem at Knight was AI going haywire.
     

    Don't see how it could be. After all, AI is perfect, and naturally so is the software that drives them. I mean, if you have all those smart people working on a piece of software, it never has issues or problems.

     That said, I'm not really sure how a Rocket scientist fits into the scheme of creating financial trading software. I can see something like statisticians and such, but I cannot fathom how they could put the skills of an aerospace engineer to good use in that context.I guess parts of their underlying capabilities and knowledge apply, but then they aren't really hiring them as a Rocket scientist.



  • @BC_Programmer said:

    @Speakerphone Dude said:

    I doubt that the problem at Knight was AI going haywire.
     

    Don't see how it could be. After all, AI is perfect, and naturally so is the software that drives them. I mean, if you have all those smart people working on a piece of software, it never has issues or problems.

    The question is not about AI being perfect or not. It's about AI being involved or not.

    It has now been reported that "Knight's software executed in a matter of minutes a series of trades that were designed to be done over a period of days"; this makes it clear that the problem is not about some magic AI doing trading decisions but rather about a poor implementation of an automation solution.

    full article


  • Speakerphone, it sounds like you're disagreeing with something, but I can't tell what that something is...



  • @BC_Programmer said:

    I'm not really sure how a Rocket scientist fits into the scheme of creating financial trading software

    Isn't "rocket scientist" a catch-all for "smart person"?

    Even though the only thing a rocket scientist really needs to know is Newton's laws!



  • @snoofle said:

    Personally, having seen not only the publicized screwups, but the ones that DON'T make it into the news as well, I think program trading should be banned. Period.
    I second that. I just can't figure how in hell this became legal in the first place.


  • Discourse touched me in a no-no place

    @toshir0 said:

    @snoofle said:

    Personally, having seen not only the publicized screwups, but the ones that DON'T make it into the news as well, I think program trading should be banned. Period.
    I second that. I just can't figure how in hell this became legal in the first place.

    "Nulla poena sine lege."



  • @toshir0 said:

    @snoofle said:
    Personally, having seen not only the publicized screwups, but the ones that DON'T make it into the news as well, I think program trading should be banned. Period.

    I second that. I just can't figure how in hell this became legal in the first place.

    Holy fuck. Is everything in France actually illegal until the government says otherwise?



  • @toshir0 said:

    @snoofle said:

    Personally, having seen not only the publicized screwups, but the ones that DON'T make it into the news as well, I think program trading should be banned. Period.
    I second that. I just can't figure how in hell this became legal in the first place.

    In the United States, everything's legal by default. Laws have to be passed to make things illegal. That's why (almost) all of the items in the Bill of Rights are phrased "Congress shall pass no law that X".



  • Pretty sure toshiro meant "how this remained non-illegal [after the first mishap]".



  • @dhromed said:

    Pretty sure toshiro meant "how this remained non-illegal [after the first mishap]".

    ZOMG! Someone lost money! Quick, make that illegal!

    Seriously, though, there is no way to fairly interpret t0shiro that way. I know that he's not a native English speaker, so I would accept that he simply didn't write what he meant.

    As blakeyrat mentioned, in the tradition of English law (which the US inherited), "Everything which is not forbidden is allowed." Sadly, the encroachment of the state has resulted in us often coming at something from the other perspective, which is a tragedy.



  • @blakeyrat said:

    That's why (almost) all of the items in the Bill of Rights Wrongs are phrased "Congress shall pass no law that X".

    There, much better.



  • @boomzilla said:

    @dhromed said:
    Pretty sure toshiro meant "how this remained non-illegal [after the first mishap]".

    ZOMG! Someone lost money! Quick, make that illegal!

    Seriously, though, there is no way to fairly interpret t0shiro that way. I know that he's not a native English speaker, so I would accept that he simply didn't write what he meant.

    As blakeyrat mentioned, in the tradition of English law (which the US inherited), "Everything which is not forbidden is allowed." Sadly, the encroachment of the state has resulted in us often coming at something from the other perspective, which is a tragedy.

    Rockefeller was the single most important contributor to the creation and expansion of the SEC. Good ol' days.



  • @Speakerphone Dude said:

    Bill of Rights Wrongs

    Okay, now explain why.



  • Oh one of the interesting side-effects is that possession of weapons is legal unless made otherwise. Which means, in most states, it's legal to own (say) a SCUD missile. Because most states haven't bothered to make it illegal, because it's never come up.

    A few years ago there was as nasty incident in Washington State of someone using their farm as a "bestiality whorehouse", resulting in a death. Turned out that wasn't illegal in Washington, simply because it had never come up before. They ended up giving him the max sentence for animal cruelty, IIRC, and passed a law against bestiality post-haste.



  • @blakeyrat said:

    A few years ago there was as nasty incident in Washington State of someone using their farm as a "bestiality whorehouse", resulting in a death. Turned out that wasn't illegal in Washington, simply because it had never come up before. They ended up giving him the max sentence for animal cruelty, IIRC, and passed a law against bestiality post-haste.

    Yeah, colon rupture is not a nice way to die


  • Discourse touched me in a no-no place

    @Speakerphone Dude said:

    Rockefeller was the single most important contributor to the creation and expansion of the SEC. Good ol' days.

    On a side note, I read an interesting (if you're a nerd) book on public choice theory a few years ago. The book mentioned a study of rates of return on IPOs before and after the SEC was created. The theory was that since the SEC was protecting people from bogus investments, the average rate of return on new stocks should be higher than before. It turned out that IPO rates of return were the same on average after the SEC was created. The conclusion the book drew was that if the SEC is protecting people from bogus investments, it's also preventing them from making some profitable investments.



  • @PedanticCurmudgeon said:

    The conclusion the book drew was that if the SEC is protecting people from bogus investments, it's also preventing them from making some profitable investments.

    You know, I am okay with that.



  • @PedanticCurmudgeon said:

    The conclusion the book drew was that if the SEC is protecting people from bogus investments, it's also preventing them from making some profitable investments.

    I'm sure that's true, especially now that they're all surfing porn and rubber stamping guys like Madoff. Not to mention how they've twisted and abused stuff like insider trading. I think the SEC, as an institution, has matured enough that the benefits no longer outweigh the costs.



  • @Xyro said:

    @Speakerphone Dude said:
    Bill of Rights Wrongs

    Okay, now explain why.

    Sorry, I don't discuss politics with biased liberals, only with biased conservatives.


  • Discourse touched me in a no-no place

    @Speakerphone Dude said:

    Sorry, I don't discuss politics with biased liberals, only with biased conservatives.

    Is there any other kind of either?



  • @Speakerphone Dude said:

    I don't discuss politics with biased liberals, only with biased conservatives.

    What is the difference?



  • @serguey123 said:

    @Speakerphone Dude said:
    I don't discuss politics with biased liberals, only with biased conservatives.

    What is the difference?
     

    I could tell you, but there'd be some bias.



  • @dhromed said:

    @serguey123 said:

    @Speakerphone Dude said:
    I don't discuss politics with biased liberals, only with biased conservatives.

    What is the difference?
     

    I could tell you, but there'd be some bias.

    I suspect that you are an extreme centrist.



  • @Speakerphone Dude said:

    @dhromed said:

    @serguey123 said:

    @Speakerphone Dude said:
    I don't discuss politics with biased liberals, only with biased conservatives.

    What is the difference?
     

    I could tell you, but there'd be some bias.

    I suspect that you are an extreme centrist.

    A terrorist?


  • @serguey123 said:

    A terrorist?
     

    Terrorists tighten up security because of me.



  • @dhromed said:

    @serguey123 said:

    A terrorist?
     

    Terrorists tighten up security because of me.


    Among other things



  • @serguey123 said:

    @dhromed said:

    @serguey123 said:

    A terrorist?
     

    Terrorists tighten up security because of me.


    Among other things
     

    Irrelevant. They're fucked either way.

     



  • @dhromed said:

    They're fucked either way.

    YES!



  • @flabdablet said:

    Knight Capital Says Trading Glitch Cost It $440 Million
     

    <rerail>

    They get a lifeline - wait.. WHAT?

    Analysis on Nanex of what happened. And for giggleworthy quotes, Tom Joyce opens mouth and inserts foot.

     

     



  • @Cassidy said:

    @flabdablet said:

    Knight Capital Says Trading Glitch Cost It $440 Million
     

    <rerail>

    They get a lifeline - wait.. WHAT?

    Analysis on Nanex of what happened. And for giggleworthy quotes, Tom Joyce opens mouth and inserts foot.

     

     

    @Knight CEO said:

    WE HAVE A CULTURE OF COMPLIANCE

    I've been working in finance for quite a while and whenever I hear potential clients bragging about "compliance" I know I'll find a big WTF organization. It's one of those red flags, like having "democratic" in the name of a country.



  • @Speakerphone Dude said:

    I've been working in finance for quite a while and whenever I hear potential clients bragging about "compliance" I know I'll find a big WTF organization. It's one of those red flags, like having "democratic" in the name of a country.

    Yes, and that organization is the Government of the United States of America. At least, that's my experience, because that's what the compliance is directed at. Well, sometimes there's a state involved.



  • @boomzilla said:

    @Speakerphone Dude said:
    I've been working in finance for quite a while and whenever I hear potential clients bragging about "compliance" I know I'll find a big WTF organization. It's one of those red flags, like having "democratic" in the name of a country.

    Yes, and that organization is the Government of the United States of America. At least, that's my experience, because that's what the compliance is directed at. Well, sometimes there's a state involved.

    "Compliance" does not mean only "compliance with federal or state regulations". You'll find out if one day you work in the finance industry.


  • Discourse touched me in a no-no place

    @boomzilla said:

    @Speakerphone Dude said:
    I've been working in finance for quite a while and whenever I hear potential clients bragging about "compliance" I know I'll find a big WTF organization. It's one of those red flags, like having "democratic" in the name of a country.
    Yes, and that organization is the Government of the United States of America. At least, that's my experience, because that's what the compliance is directed at. Well, sometimes there's a state involved.
    Finance isn't the only industry that has governmental compliance standards. The petrolium industry has its own set of foibles. API Standards for the fiscal measurement of oil and gas (think glorified, and 'highly' accurate gas/oil meters) for example are world-wide, even in the Middle and Far East where they are also imposed (relates to measurement under pressure and temperature that differs from the 'normal'.) The A in API stands for American. That was my last job.



    Even the transport industry aren't immune (current job - again multiple countries.) Different things of course - they don't care about how high the pressure is on the tires on the train are, but they are rather more concerned that your equipment will still work (and alert 'central control') when the computer on the vehicle is overheating because someone ignored the fact that it was overheating last week due to the dodgy air conditioning (which it duly reported, as required) and is in immenent danger of setting fire to the conductor's compartment. Ditto (to a lesser extent) buses and taxis.


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