We have to trade faster!
Solarflare Communications is an unheralded soldier in the eternal war on latency. With its founding in 2001, Solarflare took on the daunting raison d'être of grinding down latency from one product generation to the next for the most latency-sensitive use cases, such as high frequency trading. Today, the company has more than 1,400 customers using its networking I/O software and hardware to cut the time between decision and action. In high frequency trading, the latency gold standard is 200 nanoseconds. If you're an equity trader using a Bloomberg Terminal or Thomson Reuters Eikon, latency of more than 200 nanoseconds is considered to be shockingly pedestrian, putting you at risk of buying or selling a stock at a higher or lower price than the one you saw quoted. Now, with its announcement of TCPDirect, Solarflare said it has cut latency by 10X, to 20-30 nanoseconds.
[...] The CTO of an equity trading firm, who agreed to talk with HPCwire's sister [publication] EnterpriseTech anonymously, said his company has been a Solarflare customer for four years and that its IT department has validated Solarflare's claims for TCPDirect of 20-30 nanoseconds latency. He regards Solarflare as a partner that allows his firm to focus on core competencies, rather than devoting in-house time and resources to lowering latency. "It used to be the case that there weren't a lot of commercial, off-the-shelf products applicable to this space," he said. "If one of our competitors wanted to do something like this for competitive advantage, Solarflare can do it better, faster, cheaper, so they're basically disincentivized from doing so. In a sense this is leveling the playing field in our industry, and we like that because we want to do what we're good at, rather than spending our time working on hardware. We're pleased when external vendors provide state-of-the-art technology that we can leverage."
(Score: 5, Insightful) by ikanreed on Tuesday January 24 2017, @11:35PM
i.e. rent-seeking so fast you can't even see it.
(Score: 2) by Zz9zZ on Tuesday January 24 2017, @11:51PM
Can you please elaborate? I don't like HFT and it feels like gaming the system, but I don't have enough knowledge about it to support my feelings. I would like to be able to bust out some decent evidence next time I get into a debate about it.
~Tilting at windmills~
(Score: 2) by takyon on Wednesday January 25 2017, @12:01AM
Here are some older HFT stories:
The End of High Speed Trading? - Probably Not [soylentnews.org]
SEC May Relax Rules to Increase Fairness [soylentnews.org]
UK Citizen in Jail for Causing "Flash-Crash", or Just High-Frequency Trading? [soylentnews.org]
Accused British "Flash Crash" Trader to be Extradited to the US [soylentnews.org]
All verified to have some pro/con arguments in the comments. There are probably more because I don't think this is the first HFT hardware story I've submitted.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 5, Insightful) by ikanreed on Wednesday January 25 2017, @03:54AM
Oh, it's like this: information asymmetry can be so profound that HFTraders can rob the profit from basically anyone else at the market. That is to say, they can have someone else take the risk at choosing to buy at a certain price, someone else take the risk of selling at another price, and eat every penny of the difference by contributing nothing other than having servers physically closer to the exchange than anyone else.
They are a middleman created purely by market rules allowing them to do so. They provide no liquidity, they provide no new information, they provide no insight, they're leeches on the system, and they're quietly let continue because it breaks no laws, and the costs they represent are pennies on the hundred dollars.
But in a summation, there is a collective fortune lost. Imagine a 0.1% tax increase by a government, with the cited purpose as being "legislative branch bonus fund"
(Score: 5, Insightful) by FatPhil on Wednesday January 25 2017, @08:35AM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2, Disagree) by khallow on Wednesday January 25 2017, @09:50AM
Oh, it's like this: information asymmetry can be so profound that HFTraders can rob the profit from basically anyone else at the market.
Utter nonsense. They can't know what can't be known. If I buy 500 shares of Acme Corp at $10 and sell it at $20 from my online trade account, the HFT program doesn't magically know that. They can only react to existing trading patterns on the appropriate time scale and any orders they place come after. They're not some oracle that knows what you do before you do it. The people who do know, your broker, can do a variety of games given that information, but they don't need HFT and they can pull a lot more than 0.1%.
They are a middleman created purely by market rules allowing them to do so. They provide no liquidity, they provide no new information, they provide no insight, they're leeches on the system, and they're quietly let continue because it breaks no laws, and the costs they represent are pennies on the hundred dollars.
Well, they do provide liquidity and response to new information - standard market maker benefits. So you are in error there. They just aren't providing it on a time scale you understand.
But in a summation, there is a collective fortune lost. Imagine a 0.1% tax increase by a government, with the cited purpose as being "legislative branch bonus fund"
Funny how that's more than a couple of orders of magnitude shy of the real world tax rates that governments impose.
(Score: 2) by Zz9zZ on Wednesday January 25 2017, @06:37PM
The most important part of the response you quoted
But in a summation, there is a collective fortune lost. Imagine a 0.1% tax increase by a government, with the cited purpose as being "legislative branch bonus fund"
and your best answer is that governments take more as taxes. You just put the nail in the coffin, HFT and more generally the stock market, is a gambling problem and the big players are "the house". Sure it has a real benefits, but it also created a massive industry whose business model is to take as much money out of the investment cycle as they can. HFT is simply able to open up a new set of variables to exploit. It is a tax on the system with nebulous benefits that no one can even really say are real.
I wonder what would happen if people were required to hold on to their purchases for at least 12 hours... I like the idea of favoring long term investments over short term profit maximizations. Might bring about a more sane approach to financial markets.
~Tilting at windmills~
(Score: 1) by khallow on Wednesday January 25 2017, @09:02PM
and your best answer is that governments take more as taxes.
By two orders of magnitude. I guess I wasn't clear here. I'll always be far more concerned about the squandering of double digit percentages of my income than the squandering of 0.1% of my income.
(Score: 2) by Zz9zZ on Wednesday January 25 2017, @10:43PM
I won't argue your priority, but I do argue the concept of letting some financial firms make a business out of fleecing investors by using fancy hardware to work the margins. Governments tax for a purpose, and the money generally goes back into the economy in some form. HFT seems to be taxing every transaction, it is like a casino where the house can play the odds. Nothing of value is created except for vague promises of liquidity and market making. I cry bullshit, and point to the insane amount of money invested in HFT infrastructure as the evidence. If there weren't piles of money to be made then HFT wouldn't exist, and those piles of money come from other investors. The profits that get sucked out don't go back into the economy, they simply pad some very large bank accounts... Money out, vague promises of "market benefits" in.
~Tilting at windmills~
(Score: 1) by khallow on Wednesday January 25 2017, @11:09PM
but I do argue the concept of letting some financial firms make a business out of fleecing investors by using fancy hardware to work the margins.
Why exactly do fleeceable investors, gambling irrationally in ways that HFT can exploit, deserve to keep their money? The current situation where they give their money to more competent traders seems better for all concerned. The "investor" loses the money that they are insistent on losing and someone with some really cool tech ideas gets it.
Nothing of value is created except for vague promises of liquidity and market making.
Which, let us note, is good enough. You have yet to show that HFT is harming you in any way.
(Score: 2) by Zz9zZ on Thursday January 26 2017, @12:06AM
The problem is that you think
Why exactly do fleeceable investors, gambling irrationally in ways that HFT can exploit, deserve to keep their money?
is ok.
The whole premise of the stock market is to make it easier for businesses to get investors. That is the gamble, choosing a good company to invest in. However, finance people quickly realized they can play shell games with stocks and fleece people out of their money. This creates a whole new "market" that is basically just gambling, except that these new investment firms can manipulate markets to various degrees to make some stocks look better or worse. It stopped being about investing in business and it is now about playing the margins to take people's money. It is 100% off the rails, and with increasing amounts of people's money in the stock market with 401ks etc. I dare say it should be illegal. HFT is harmful because it is another layer of scamming people, reacting to market information faster than humanly possible.
If you can't comprehend why gambling with the stock market is bad, then I don't know what to tell you. HFT is simply another layer. Anyone who takes money out of the stock market that isn't stock dividends is a thief. The money doesn't go to "really cool tech ideas" at all, so you are operating on seriously flawed premises.
After the IPO, stocks do nothing for the business itself.
The original company that issues the stock does not participate in any profits or losses resulting from these transactions, because this company has no vested monetary interest.
The stock market is legalized gambling, and a hell of a lot of money flows out of it and into private accounts. There is no real-world benefit, simply shuffling wealth around in what amounts to an imaginary game.
But hey, you're personally invested in the pyramid scheme of corporate capitalism as well, so keep reaching for the stars khallow and maybe one day you can be the boot stomping on the little people. More tax loopholes! More crazy tech to outmaneuver regular traders, MOAR MONIES! It is a sick game that doesn't have real world value, it just steadily shuffles wealth into individual pockets. It seems to take a market crash for people to wake up, but that only lasts a few days. Retirement accounts? Pffft, losers shoulda known how to invest better.
~Tilting at windmills~
(Score: 1) by khallow on Thursday January 26 2017, @04:31AM
However, finance people quickly realized they can play shell games with stocks and fleece people out of their money.
They sure can. But that's not HFT. That's fraud and it can happen at any time scale.
There is no real-world benefit, simply shuffling wealth around in what amounts to an imaginary game.
To you. Clearly it is a benefit to other people.
so keep reaching for the stars khallow and maybe one day you can be the boot stomping on the little people. More tax loopholes! More crazy tech to outmaneuver regular traders, MOAR MONIES!
HFT is not directed at regular traders. It's directed at high volume and high frequency traders.
It is a sick game that doesn't have real world value, it just steadily shuffles wealth into individual pockets.
It does have real world value to the people who engage in it. I don't see why your opinion of its value should trump theirs.
Retirement accounts? Pffft, losers shoulda known how to invest better.
Why is your retirement account in HFT? There's two related problems here that you are completely glossing over. First, the pension fund managers should not be able to engage in HFT. It's way too risky. Second, where's the concern of the pensioners? They should be getting involved now, not when their fund has gone bankrupt.
(Score: 1) by khallow on Wednesday January 25 2017, @09:15PM
I wonder what would happen if people were required to hold on to their purchases for at least 12 hours...
You'd lose market makers for starters. That badly harms liquidity and widens price spread.
(Score: 2) by Zz9zZ on Wednesday January 25 2017, @10:38PM
Well, liquidity is something I don't see as a huge positive. To me that feels more like a bonus for the brokers by being able to squeeze the margins tighter, I would prefer that longer term stability be given more priority. Also, specific to HFT the liquidity benefits seem to be a hotly contested issue anyway.
~Tilting at windmills~
(Score: 1) by khallow on Wednesday January 25 2017, @11:02PM
Well, liquidity is something I don't see as a huge positive.
What's going on is that you don't see HFT as something that benefits you. Conversely, your existence isn't a huge positive for me. We can make all sorts of disturbing conclusions such as slave labor and forced organ harvesting when we go by the metric of personal benefit.
I would prefer that longer term stability be given more priority
Long term stability such as you having a permanent mediocre job, a fixed life span, unchanging society, and no impact on the world from birth to death? Instability comes with considerable advantages.
(Score: 2) by Zz9zZ on Wednesday January 25 2017, @07:01PM
Found a good write up: http://www.nakedcapitalism.com/2013/03/yes-virginia-hft-and-liquidity-are-not-all-they-are-cracked-up-to-be.html [nakedcapitalism.com]
And HFT now dominates equity trading:
It has been estimated that today 73% of equity trading volume is a result of algorithmic and high frequency trading.3 HFT has changed fundamental characteristics of markets. It has been estimated that at the end of the Second World War, the average holding period for stocks was 4 years. By the turn of the millennium, it was 8 months. By 2008, the average holding period declined to 2 months. And it has been estimated that, at least for actively traded shares, it had declined to 22 seconds by 2011.4 Obviously, trading that churns the market has increased tremendously.
A market with an average holding period of 22 seconds has nothing to do with investing and everything to do with profiting from churn.
~Tilting at windmills~
(Score: 1) by khallow on Wednesday January 25 2017, @09:12PM
A market with an average holding period of 22 seconds has nothing to do with investing and everything to do with profiting from churn.
So what is your frequency of trade? In my case, it's many months between trades. I'm not the source of the phenomenon and I'm not affected by the phenomenon (except supposedly when the HFT takes their 0.1% of my multi-year profits, oh dear!). So it is no business of mine what games they play.
Meanwhile good ole Uncle Sam takes double digit percentages of my profits (which are treated as normal income). The state of Colorado (my state of residence) takes a smaller single digit percentage. I think I have my understandings and priorities straight about who is doing what to and for me.
(Score: 2) by Scruffy Beard 2 on Wednesday January 25 2017, @08:24PM
But with lower latency, they *can* know you are trying to buy a stock.
It is called front-running. It is only illegal is the peons do it though.
(Score: 1) by khallow on Wednesday January 25 2017, @09:14PM
But with lower latency, they *can* know you are trying to buy a stock.
It is called front-running. It is only illegal is the peons do it though.
Front running is just as illegal for the stock markets and brokers to do. It's insider trading.
(Score: 2) by bob_super on Tuesday January 24 2017, @11:41PM
At GigE rates, you don't even get a full packet in that amount of time.
Did they also strip unnecessary header fields to gain more time?
Better not leave a bend in your cabling when you're down to this kind of number...
(Score: 2) by takyon on Tuesday January 24 2017, @11:52PM
Packets? Where we're going, we don't need packets.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 2) by butthurt on Wednesday January 25 2017, @12:01AM
Even in a vacuum, light only travels about one foot per nanosecond.
http://www.chemteam.info/Electrons/LightSpeedTrivia.html [chemteam.info]
(Score: 2) by driverless on Wednesday January 25 2017, @03:25AM
Even in a vacuum, light only travels about one foot per nanosecond.
Not if you know about the shortcut.
(Score: 2) by Scruffy Beard 2 on Wednesday January 25 2017, @12:04AM
vt=d
3.00exp8(m/s)*20exp-9(s)=6m (in vacuum)
So we are talking cable less than 4m in length (light is about 2/3 the speed of light (vacuum) in copper/glass)).
We are talking minimum patch cable lengths for Ethernet here.
(Score: 4, Interesting) by bob_super on Wednesday January 25 2017, @12:15AM
I believe the point is that the IC gains you 180ns, the equivalent to being about 24m closer to the exchange switch per your math (at least your math here, since you got it backwards below).
That's either a few hundred millions gained by being the fastest, or a few millions saved by not paying for the premium datacenter spots.
(Score: 1) by Scruffy Beard 2 on Wednesday January 25 2017, @12:26AM
actually, the other version was correct after all: just in a weird unit time/distance format.
(Score: 3, Insightful) by Uncle_Al on Tuesday January 24 2017, @11:43PM
or pawn of billionares?
you choose.
(Score: 1) by LordByronStyrofoam on Wednesday January 25 2017, @12:02AM
Signals traverse copper cable at about .64c (where c is the speed of light). That's about 5-8nS per foot.
So they are placing their facility within 4 feet of the exchange's boxes? If not, I think I'm calling bullshit.
(Score: 2) by Scruffy Beard 2 on Wednesday January 25 2017, @12:08AM
Light moves at about 1 ft per ns. So it is actually about 1.5ft/ns in a transmission line.
(Score: 1) by Scruffy Beard 2 on Wednesday January 25 2017, @12:24AM
about 8inches per ns in a transmission line.
Who uses feet an inches anymore?
(Score: 1) by Scruffy Beard 2 on Wednesday January 25 2017, @12:28AM
The (nano) seconds per foot in contrast with meters per second is apparently confusing.
(Score: 3, Informative) by bob_super on Wednesday January 25 2017, @12:36AM
Obviously, since you typed that it would be faster in a transmission line (1.5 ft/ns) than in the void (1 ft/ns).
I use 180ps/in in typical PCB stackup, but metric everywhere else
(Score: 3, Touché) by takyon on Wednesday January 25 2017, @12:41AM
You require more thinking-typing-submit latency. :^)
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 3, Informative) by FatPhil on Wednesday January 25 2017, @08:45AM
"TCPDirect attacks this network stack overhead problem with a “slimmer” kernel bypass architecture in which the TCP/IP stack resides in the address space of the user-mode application. ... it’s a use-case that requires only a limited number of connections. ... removes the need to copy packet payloads as part of sending or receiving."
No need to threaten to call bullshit, you could instead just read TFA.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 5, Touché) by Shimitar on Wednesday January 25 2017, @08:45AM
Come on guys... This is simply amazingly funny! Really, what kind of unit of measures you use?
I can understand feed or pounds in the "real" world, if you where used to them... But, honestly, when i see "c" mixed with feets and "nano" attached to inches... i really start laughing!
Coding is an art. No, java is not coding. Yes, i am biased, i know, sorry if this bothers you.
(Score: 1) by khallow on Wednesday January 25 2017, @11:20PM
So they are placing their facility within 4 feet of the exchange's boxes?
At this point, I wouldn't be surprised if in the near future someone is putting their facility inside the exchange's boxes - perhaps even on the same board. The whole mess will probably break down once HFT is renting space on the chip, but there's still a ways to go there.