March 26, 2015

Trading Tech Talk 25: Beware the HFT Armada

56 minutes

Hot Topics in Tech: OCC to consider tech overhaul. Virtu hopes time can heal HFT furor. Study by CFTC official questions legality of HFT practice. City of London "black book" is called for to track "bad apple" traders. Physicist says it is possible to use ships to facilitate high-frequency trading.

The Inbox: Listener questions and comments

Question from Anthony J. - Hello Mark and Henry. I very much enjoy the program and your insight into this marketplace. I have a question about options data. You have mentioned on other programs an explosion of data and messaging. People always talk about a ceiling for exchanges. But I have to wonder if we are approaching some sort of theoretical limit on how many options series can be listed. Every new issue has hundreds or even thousands of strikes with both calls and puts. That is a tremendous burden for any platform to update in a real time basis with every tick of the stock. At what point do traders simply throw up their hands and say "no mas."

Comment from Mark Brant - Thanks Henry + Mark for info about "shows", and thank 4 the free flow data on TOI.com and The Top Ten from Trade Alert. Why would the Russians do something so stupid? Their economy is shot already, cyber terror would pulverize it!

Question from Vargo - The derivatives markets pose a number of significant challenges from a technology standpoint. There has been a tremendous expenditure to create systems to model so many disparate classes and update them with every tick of the underlying. Have we we seen any spillover of this amazing technology to other industries or areas?

Question from Shadowbox - Is it feasible to use GPS to increase the timing accuracy of data stored by firms and provided to regulators? Or is GPS not fast or accurate enough to meet the new 50ms standard proposed by Finra?

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