
News organizations respond to Fed lockup questions - kitcar
http://www.cnbc.com/id/101056168
======
caf
The CNBC article has more information:
[http://www.cnbc.com/id/101056168](http://www.cnbc.com/id/101056168)

It looks like there's plenty of opportunities for the information to leak out
of the lock-up early - for example: _Print reporters were told they were
allowed to open a phone line to their editors at headquarters offices a few
moments in advance of the hour, but not allowed to interact with people on the
other end of the line until exactly two p.m._

A print reporter could prearrange to call one phone number at their office for
"taper" and another for "no taper".

~~~
oofabz
A reporter could also break the rules and stealthily send a text message.

~~~
conductor
Or knock-knock a Morse code on the phone's mic.

------
jauer
There are several microwave radio networks built to link New York and Chicago
for high-frequency trading purposes. These paths are several milliseconds
shorter than the fiber paths and are a few years old at this point. The
article should have mentioned this instead of jumping straight from fiber to
neutrinos.

Some details:
[http://online.wsj.com/article/SB1000142405270230406570457742...](http://online.wsj.com/article/SB10001424052702304065704577426500918047624.html)

------
jere
>Working off of a list provided by the Fed of news organizations participating
in last week's lock up, CNBC contacted each of the news organizations that
offer low latency data services to ask whether they transmitted any data out
of the Fed's lockup room. A key question is whether or not any organization
transmitted information out of the lockup room and into its own computer
system before 2 p.m. If that was done, _the data could have been moved to
computer servers near Chicago before 2 p.m._ and publicly released the
information from there at precisely 2 p.m. – enabling subscribers of that data
service to get the information milliseconds before others in Chicago relying
on transmissions from the Federal Reserve in Washington to arrive.

Sounds like the most reasonable explanation to me.

But of course I'm not 100% sure what a lock-up room is. It's being described
as reporters restricted from speaking before 2pm. Obviously, that has nothing
to do with millisecond precision.

[http://www.cnbc.com/id/101056168](http://www.cnbc.com/id/101056168)

------
slashcom
I'll throw this out there: what if the clock in Chicago was just 5ms slower
than the one in NYC. The logs would show the transactions happened at the same
time, but they didn't.

The NYSE mandates that business clocks never drift more than 1s from the
atomic clock [1]. What is the resolution guaranteed between the two clocks
being compared? After all, it's impossible to guarantee perfect
synchronization of two clocks at any distance (bounded by the speed of light
and the drift rate of the clocks) [2].

The only retort I can think of is why do the other players react at the proper
time.

[1] [http://www.nyse.com/nysenotices/nyse/rule-
changes/detail;jse...](http://www.nyse.com/nysenotices/nyse/rule-
changes/detail;jsessionid=32D8706B7E53902582A32376B5F50B09?memo_id=12-1)

[2] Cristian, F. (1989), "Probabilistic clock synchronization", Distributed
Computing (Springer) 3 (3): 146–158

~~~
zb
GPS receivers routinely provide sub 50ns (yes, nanosecond) accuracy on clock
synchronisation. This is not a difficult problem.

------
wmf
Previous discussion of what appears to be the primary source:
[https://news.ycombinator.com/item?id=6417511](https://news.ycombinator.com/item?id=6417511)

------
kristianp
The article says 7 milliseconds, so this title is wrong.

------
hrasyid
>> _In theory, the trading reaction should have begun in New York several
milliseconds before it began in Chicago, because information takes several
more milliseconds to travel the longer distance._

Just curious, how much difference could this "several milliseconds" have made?

~~~
dingaling
> Just curious, how much difference could this "several milliseconds" have
> made?

Most high-frequency trading systems could actually execute an entire tranche
of selling in that epoch.

Consider the Hibernian Express fibre-optic link from NY to London,
commissioned this year. A quarter of a billion dollars spent to shave 6
milliseconds off the transit time.

~~~
001sky
_A quarter of a billion dollars spent to shave 6 milliseconds off the transit
time._

Price of front running.

~~~
ballard
Imagine the pressure to reach a 4-5x IRR on that.

It would seem conspicous outlay could be competitive to signal a defensible
business model where such outlay doesn't actually return itself but deters
competition.

------
ck2
One more example of people who don't actually make anything, just making money
off other people's work.

They allow this game of "being first" by milliseconds to make someone more
money. Doesn't have to be that way, but they let it happen, so it says a lot
about their mentality.

------
maaku
There's a very simple solution: sub-cent prices. Eliminate much of the profit
made by HFT.

~~~
Lerc
Quantize trades to 1 second intervals. Perhaps also allow any trade to be
voided by either party in the following 1 second interval. Wait one second for
assurance.

I have trouble seeing how implementing something like this would negatively
impact upon any trading necessary to support the economy.

------
hownottowrite
Nice background on low latency news feeds:
[http://hartmannluggagenews.blogspot.com/2012/01/trade-
news-p...](http://hartmannluggagenews.blogspot.com/2012/01/trade-news-
profiting-from-trading-with.html)

------
mesozoic
Milliseconds

------
tomnis
milliseconds. only a few orders of magnitude off. fuck.

------
abbazabba
the how is interesting. the why, moreso.

"By one estimate, as much as $600 million dollars in assets changed hands in
the milliseconds before most other traders in Chicago could learn of the Fed's
September surprise"

whoever leaked it probably had a connection that gave them an incentive
greater than their career or any fines the government could impose.

career reputation + fines < %cut of income from arbitrage

------
brador
Could you use quantum mechanics to get around the speed of light limitation?

~~~
gonnakillme
No[1].

[1]: [http://en.wikipedia.org/wiki/No-
communication_theorem](http://en.wikipedia.org/wiki/No-communication_theorem)

~~~
ballard
Correct. Information cannot travel FTL or causality would be mutable.

~~~
Lerc
I thought the actual conclusion made was:

If information can travel FTL then causality would be mutable.

That doesn't carry the implied premise that causality is immutable. I don't
think that has yet been proven. In fact, if causality _is_ mutable, it might
be possible to prove that it isn't even though it is.

Can of worms...

~~~
ballard
Box of worms with a cat, doc brown.

Good luck with that.

------
po
So... this brings up a question... are trading orders 100% anonymous?

