Forgot your password?
Close
typodupeerror
IT Technology

High-Speed Traders Are Feuding Over a Way To Save 3.2 Billionths of a Second (wsj.com) 106

Posted by msmash from the fast-and-furious dept.
A millisecond used to be a big deal for the world's quickest traders. A dispute over huge trading profits at one of the world's largest futures exchanges shows they now think a million times faster [non-paywalled source]. From a report: The controversy is about an arcane technical maneuver in which high-speed traders bombard Frankfurt-based Eurex with useless data. The idea is to keep their connections to the exchange warm so they can react fractionally faster to market-moving information. The battle is the latest chapter in a decadeslong contest among secretive ultrafast trading firms, which have pursued a relentless quest for minuscule speed advantages.

A group of high-frequency trading firms has exploited the practice to rake in hundreds of millions of dollars, says Mosaic Finance, a French firm that has complained to Eurex and European regulators. "An arms race is OK, but you must use legal weapons," said Hugues Morin, founder of Mosaic. Eurex says Mosaic's claims are baseless.

[...] High-speed traders often seek to capture fleeting differences between prices of related assets, making quick response times critical. If benchmark Euro Stoxx 50 index futures rise, for example, contracts tied to Germany's DAX will usually follow. A first mover will be able to buy DAX futures before they tick higher, then sell out at a higher price -- a strategy that can add up to big profits over time. The maneuver that prompted Mosaic's spat with Eurex can improve reaction times by about 3.2 nanoseconds, according to the French firm, which calls it "corrupted speculative triggering," or CST for short.
This discussion has been archived. No new comments can be posted.

High-Speed Traders Are Feuding Over a Way To Save 3.2 Billionths of a Second More

High-Speed Traders Are Feuding Over a Way To Save 3.2 Billionths of a Second

Comments Filter:

  • Add Random Latency to Trades (Score:5, Insightful)

    by Luthair ( 847766 ) on Tuesday December 16, 2025 @12:44PM (#65861727)
    And just kill the people trying to use arbitrage to front run the market. They aren't adding any value, they're leeches.

    • Not random, no. Just add some latency period. That would do most of the job. Another solution is to penalize trades which are shorter than some time period. You can still make them but it will cost you. Either of these things would eliminate HFT.

      • Re: (Score:2)

        by Luthair ( 847766 )
        If its consistent latency then we're in the same state we're in now where people are shaving nanoseconds to beat others. If its random then they can't reliably can an advantage by shaving time.

    • I see no downside for legitimate trading to run everything on a fixed once a second, or heck once a minute clock. Everyone places their trades for a given window, then everything gets settled in time for the next window. High frequency traders are providing net negative value to everyone around them, just simplify it all.

      • Re: (Score:2)

        by AmiMoJo ( 196126 )

        Say you have 100 shares available at a given price, and three people offer to buy them all in the same second. How do you handle that? You could give them all 33, and have one spare, as long as they are okay with only getting 33. Maybe you could have an "all or nothing" marker on the trade.

        Random delays have the same issue, the buyer either has to accept an unknown price up front, or the seller has to accept cancelled trades and unpicking failed multi way deals.

        The system was designed for human traders and

    • Re: (Score:3)

      by necro81 ( 917438 )
      An alternate (although mathematically similar) approach would be:

      Select a unit of time: let's say five seconds. Call that the Trade Time Slice. Within each Trade Time Slice, all trades are settled equally. If you happen to arrive a nanosecond sooner than the next guy, but you're both within the same 5-s interval (Trade Time Slice), both trades get the same timestamp and price, rather than the strictly FIFO behavior we have now.

      Yes, there'd still be an incentive to show up sooner than the next guy

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        An alternate (although mathematically similar) approach would be:

        Select a unit of time: let's say five seconds. Call that the Trade Time Slice. Within each Trade Time Slice, all trades are settled equally. If you happen to arrive a nanosecond sooner than the next guy, but you're both within the same 5-s interval (Trade Time Slice), both trades get the same timestamp and price, rather than the strictly FIFO behavior we have now.

        Except whether it's one second, 5 seconds, 60 seocnds, or whatever, that doesn't

    • Okay FP, but I think that's a weak approach. They would simply play the same game and try to devise new ways to cheat under the modified rules.

      I think the fundamental problem is the lack of friction. There is no cost to trades, so more trades are always better. On that basis I think a transaction tax, even a tiny one, would be the best fundamental solution. Without friction the engine will accelerate without limit until it explodes. But I also think it's too late and the next market implosion will be much w

      • Re: (Score:2)

        by Luthair ( 847766 )
        As far as I know exchanges are paid for trades executed on their market, its a key part of how they make money.

        • Re: (Score:2)

          by shanen ( 462549 )

          I'm trusting Michael Lewis on this, but I don't think that applies to the members of the exchanges, and the high speed traders are members. The fees for trades are limited to the little suckers like you and me.

          Well, also I've read some of the proposals for transaction fees, and none of them seem to make sense unless the current transactions are without fees.

    • Re: (Score:3)

      by dargaud ( 518470 )
      Or better, tax trades under 1s at 90%. Under a day at 50%. Under a month at 20% and over 20 years at 0% (or something similar). Trades are meant to be a way to finance company growth, they are *not* meant to be some gambling game.

      • Re: (Score:2)

        by HiThere ( 15173 )

        Pretty much agree, except that I'd use a continuous equation, probably a logistic function, have trades of over 20 years have a negative tax, and have trades of under 10 ns have a tax rate greater than 100%.

    • Any stock investment should be required to be held one business day. I would say until the trade is settled but then these middlemen will move to go to instant settlement (or try hard).

    • Random latency would have a very hard time getting regulatory approval.

    • This would be an unfair practice. There are markets such as HKG that have a small transaction fee that does what I think you are after with this idea.
  • How are these traders anything but parasites? If I buy at 10 at midday then sell for 10.00001 a millisecond later just what meaningful investment has occurred? The company whose shares I buy doesn't even notice. What, not to put too fine a point on it, the fuck is the point of HFT besides making money for people who contribute nothing? I mean I've no particular love for traders in general but HFT is something else.

    • You answered your own question. These are not investors, they are traders. Their sole job is trade on the discrepancies inherit in the system. The faster they can buy low/sell high, the more trades they can do which in turn leads to more profits.

      They may not make much on each trade, but do this multiple times each day and the numbers add up over a year.

    • I think the point is making as much money as possible by doing as little as possible.

      As much as I agree that this is not a good thing, but I don't think it's something that can be done away with without every large exchange agreeing to some sort of timing rule. No exchange will do it on its own, as too much capital will move to those that don't. No nation will block it on their own for the same reason.

      So, a market solution where all exchanges agree to limit trades in some way (minute by minute or som

    • I think it helps shrink the bid/ask spread for smaller traders, and produces a *lot* more market liquidity. When the stock is "trading" near 10:
      • If you want to buy it at 10, you can buy it at 10 + 1E6 when you want, not stuck hoping that a few people will try to sell it to you at 10.25 when they feel like it.
      • Or if you put in a limit order at 10, *someone* will be there to sell it at 10 - 1E6 if it hits that price for a duration below the limits of human perception.
      • In either case, as a smaller trader

  • put a slight but unknown delay in all transactions so as to make micro-slicing a worthless endeavor.

    • Re: (Score:2)

      by PPH ( 736903 )

      There's already a brokerage [iexexchange.io] that strives to improve customer equity by passing all of its traffic through a fiber optic delay line.

      The other option would be to detect some level of cancelled trades or dropped connections and, upon passing some threshold, lock out that account. It can be reset by having Bob Cratchit head down to the server room in the basement and manually log on to a console. Please be patient. The stairs are steep, Bob is old and has nothing more than an oil lamp to light his way.

  • These are people who had absolutely no value they just take 5 to 10% of your income.

    Anytime we want we could shut them down but we would have to change how we vote.

    The next time you're getting upset because somebody gave their kid puberty blockers or somebody said happy holidays ask yourself how many hours a year you worked so that you could get upset about that.

    The culture War costs you real money.

    • Re: (Score:1)

      by 0123456 ( 636235 )

      > Anytime we want we could shut them down but we would have to change how we vote.

      No major party wants to rein in the financial markets. I'm not sure about Harris, but I remember Clinton getting more donations from financial companies than Trump.

      > The next time you're getting upset because somebody gave their kid puberty blockers or somebody said happy holidays ask yourself how many hours a year you worked so that you could get upset about that.

      Imagine if the left had spent the last ten years pushing

      • That reigns in Wall Street. And there are tons of people in the Democratic party pushing for more who are very high up most notably Elizabeth Warren.

        This is not a both sides bads issue. One side let's Wall Street run roughshod over you and your family and the other side consistently regulates them stopping the cyclic economic crashes.

        The problem is because you think both sides bad every 4 to 8 years you let the Republicans undo everything the Democrats did. So every few years we have another cyclic

        • You really fucked up this cycle though. You didn't give Biden a full eight years to undo some of the damage. So we are going to get fucked and fucked hard.

          You seem to have mistaken others for the brain-addled one who chose to drop out of the fucking race himself.

          And if you don’t believe HE made that call, it only confirms how fucked we would have been with four more years under that administration. The hell were you granting that gift to? An autopen machine, or a cackling hyena drunk on word salad sauce?

          Lets not also overlook the most egregious and arrogant display of blatant corruption when Democrat Nancy Pelosi actually had the fucking nerve to de

    • You know what costs me real money? People like you leaching off of the welfare system. I paid enough taxes this year to buy a small house, effectively 40% of my income, despite only bringing in less than half of that in realized gains. And you know where some of that money went? To feed your fat face.

      Clean up your own house before calling other people parasites.

      • Re: (Score:2)

        by dargaud ( 518470 )
        How would you even know it went to him in particular ? Instead you can be sure it went to farmers who voted for Trump in the first place and got shafted by his shenanigans with tariffs... And looking at the deficit he's digging with a backhoe, you are not at the end of your complains...
      • There's absolutely no point disproving bullshit posts like yours. You have Google you're just being a little pissant.

        So instead of pointing out things you could easily find on Google I'm just going to remind everyone that Donald Trump is a pedophile and substantially large numbers of people here voted for that pedophile with full knowledge that he was a pedophile.

        And if you make a pedophile president then what does that make you? I think you know. And remember Trump himself said he's going to hell.

        • That's entertaining that you're telling me to use google when you've already proven that you don't. Shit, I alone called you out twice for making a claim, telling people to google it, and it turns out that google is saying exactly the opposite of what you just claimed. Who knows how many times you've done that when I wasn't even around.

          Trump is a fucking asshole as well, something you have in common, which is probably why you two go to the same pedo orgies.

          Moreover, the point still stands: Stop being a fuck

  • Note- no technical traders. (Score:3)

    by gurps_npc ( 621217 ) on Tuesday December 16, 2025 @01:11PM (#65861797) Homepage

    If you are trying to do what is called technical trading - looking at graphs to decide which day to buy or sell - this is why you do not become rich. The people that invented the math based trading 50 years ago have moved on to this super fast analysis and trading.

    For those of you that think these a-holes do not contribute anything, they do provide liquidity. It keeps spreads tight - and lets you do option trading in between the bid and ask. (When the bid is 105 and the ask is 115, the technical traders snap up your options trade at 110 - but only if you do the limit order.)

  • I'm not exactly clear what the issue is. Corrupting the CRC at the end of the packet if you didn't want to send it was something that was talked about in the 90s. I don't know if anyone was doing it but it was certainly talked about.

    Around that time, maybe a bit later, Eurex introduced discard addresses. This meant that you could start writing the packet onto the wire and if you changed your mind before you got to the destination address of the TCP header, you could write in the discard address instead of t

    • Re: (Score:2)

      by Z00L00K ( 682162 )

      Feels like that trade would be ripe for a "man in the middle" attack so "Buy at ten, sell for five" randomly.

  • that they add liquidity to the market

  • Tom Scott did a video on IEX, a smaller stock exchange that added 38 miles of fiber optic in line specifically to add latency to basically put a speed limit on trades so give humans a more even playing field:

    How to slow down a stock exchange [youtube.com]

    • Tom Scott did a video on IEX,

      Is that the exchange that was originally called "Investors Exchange", and used the domain name: investorsexchange.com, until someone noticed?

  • The TCP/IP protocol seems to be an inherent barrier to high-speed trading. That is, the purpose of the protocol is to be a) redundant b) insure that the message is sequentially ordered c) error-checked. Specifically, if you have a hardware speed-up or place servers closer to the exchange -- or any other physical process that reduces the time of execution -- you still may be inherently slowed by the process of actually exchanging information between servers. So, was wondering how high-speed trading firms get

  • What I've always said about the internet (Score:3)

    by Locke2005 ( 849178 ) on Tuesday December 16, 2025 @02:24PM (#65862025)
    At some point you have to charge people per byte transferred, otherwise you inevitably experience "The Tragedy of the Commons." There is a simple economic solution to people bombing the exchange with useless traffic. A more complicated solution would be to regard it as a denial-of-service attack.

  • I'm no economist. But the way I see it, companies making 100m's out of such trading are extracting 100m's of realisable value from the economy while contributing nothing materially back to it. What does society gain in return for the 100m's these traders make from trading?

  • How about a small percentage tax on every trade? Accomplishes "taxing the rich", reducing incentives to high frequency trading, and raises revenue.

  • IIRC it was Buffet who suggested a 100% tax on gains from any stock traded less than 1 year from purchase.

    Hell, even if they put a 1 month buffer, I think it would help.

  • This problem goes away if the law changes to require that purchasers of securities or stocks *hold* them for at least, say, one day. Or better yet, six months. Do that, and suddenly investors will start thinking about long-term returns, instead of microsecond returns. And that might lead them to think about the long-term health of companies. What a concept!

  • I remember having to phone a stock broker, who would eventually enter the order on his terminal. Then we got direct online trading, much faster (and cheaper.)
    Meanwhile, big companies computer trade on a millisecond scale, with no humans involved (and probably pay less per trade than I do, and probably get around inconveniences like the delay for their nanosecond autotrades to settle.)

    Anyone who makes money in the stock market is skimming it from someone else. I understand that, but why hand money to others

  • seems like a good idea would be to make the whole thing illegal

    i mean the stock exchange

    one could discuss it as an irredeemably gamed system which requires anyone subject to it to lie if telling the truth would hurt investors, resulting in, for example, the plastics recycling debacle of the last forty years or whatever

    but everyone already knows about that and decided its ok i guess

    how much obvious crime does there have to be in one spot before YOU stop participating?

  • What is the "Billionth of seconds" when talking about milliseconds ?! Milli is 1 / 1000 and billion is 1 / 1 000 000 000 (in US).

  • ... trades by passing then through a large spool of fiber before they go into the server, deliberately slowing trades down. It's quite popular with mid-range enterprises and corporations. I'd be trading by stocks there if be I were to IPO a corporation of mine.

Slashdot Top Deals

I never cheated an honest man, only rascals. They wanted something for nothing. I gave them nothing for something. -- Joseph "Yellow Kid" Weil

Close