Well, yes, yes

Suspected rogue trader Navinder Sarao lived in his parents’ modest home because it gave him a split-second advantage worth millions of pounds, it was claimed yesterday.
His family’s semi-detached house in suburban West London is closer to an internet server used by one of the major financial exchanges, giving him a nanosecond advantage over rivals in the City.

Why, it’s almost as if the Daily Mail journalists had no idea what they were talking about….

Quite, especially as he was trading E-minis in Chicago…..

16 comments on “Well, yes, yes

  1. The City traders will have dedicated lines direct to the exchange, so even if the datacenter is in Slough, they’d be far quicker than anyone going via the public internet.

    But it makes for a lovely story. It’s the kind of myth that will be repeated in bars for years to come.

  2. Navinder would be hailed as a hero if he did this while working for a big bank. His mistake is doing what he did without the protective umbrella of a too big to fail bank.

  3. Also, it seems to me that he was running huge risks using a domestic internet connection. What happens when the link runs slow and you can’t get your order cancellation in on time?

  4. Not to mention the Daily Mail headline writers — this morning there’s a headline saying “…Former SS guard tells court he couldn’t imagine prisoners getting out of death camp alive, as he faces charges of accessory to 300,000 murders”.

    Anyone who had been following this story knows it’s about the Auschwitz bookkeeper Oskar Groening, who wasn’t a guard.

    And it says ‘bookkeeper’ in the very first sentence of the story.

  5. So a journalist that can’t tell the difference between a High Frequency Trading platform as deployed by the big Investment banks at a cost of millions of pounds, and an exchange that was vulnerable to a “pump and dump scam”

    Dork.

  6. I read a book about how apparently high frequency traders ‘front run’ orders to make money by buying up stock they know someone else wants before the other trader gets their order in and I even kind of understood that.

    I even think I understand the old ‘pump and dump’ where you buy a bunch of shite stock and then get a load of fools to buy it before dumping yours at a high price and watching their price collapse.

    This seems different. I don’t understand how cancelling a bunch of orders can make you millions. Can anyone point me in the right direction?

  7. Ahhh thanks. Seem’s there is ‘good’ market manipulation and ‘bad’ market manipulation.

    The book I read was called ‘flash boys’ and it wasn’t particularly favourable towards these high frequency traders and stated that the regulators seemed to favour them. If that is true ( I always take these books with a pinch of salt) then perhaps that’s why they are after this bloke.

    Personally my nature leans towards ‘value investors’ and these others all seem a bit dodgy but perhaps it’s because I don’t really understand the ins-and-outs of the financial markets… at the end of the day I’m just a shoe maker 😉

  8. What is the granularity of the timestamps on the execution orders on these platforms? Microsecond resolution is very hard to get even in a real-time operating system. Nanoseconds is just silly.

  9. And then he improved his advantage even more by moving his PC into the front room.

    Pure cobblers.

    On Dongguan John’s point, FWIW (not much) I take the view that most of this high velocity trading is value neutral at best to the rest of the economy and does not generate any production at the consumer level (the only one that matters). The value generating stuff in the City could (I think it was Warren Buffet pointed this out) be cleared daily, hourly or whatever and work just fine.

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