High Frequency Trading HFT Flash crash at BATS renews market concerns

(Last Updated On: March 25, 2012)

High Frequency Trading HFT Flash crash at BATS renews market concerns


The crash caused BATS to halt its IPO on what should have been the proudest day in the exchange’s history.



Time is money… No really… Time is money!

This Infrastructure error type event – the Flash Crash is the reason external timestamping is key to market integrity. Timestamping from uniform time (NIST UTC) , and time data sourced at the picosecond resolution level which can be applied to the outside of all exchange practices and operations is the answer. This is simply tied to the mindset that you cannot take it apart unless you can track it in real-time.

But there is more – because the timestamps themselves can be bonded this can refocus the liability model outside the matching/trading or exchange engine operations. In fact with proper time-request practices individual exchange events could be carried in time-request and time-response instances from the reference clock used. Flash Crash instances can be undone easily as MARKET INFRASTRUCTURE ERRORS and no-harm, no-foul declared…

That means bonding is also easily applied in amounts ranging from millions to even billions of dollars which the HFT and Hedge operators need for their systems. And all of it simply because of ultra-precision timestamping – timestamping at market-wire speed!

The power of that final statement speaks for itself – the reference clock not only serves for calibration but event authentication from a forensic perspective.

I should point out – I am NOT talking about using NTP for just timesetting – I am talking here about using it as a time-stamping service which runs at wire-speed. Most people would tell you this is impossible – for us it seems the obvious solution since today the issue is how events are logged across very-tightly coupled infrastructures.

This solution allows for actual use of NTP as the time-stamp feature for end-use events allowing individual trade or consummation events to be actually time-stamped through the time source reference clock itself…

It just doesn’t get any better than that!


NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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