Another case of life imitating (very) contemporary science fiction, the book in question being Ian McDonald’s excellent The Dervish House: some sneaky shenanigans via the compromised accounts of Czech traders has allowed some black-hat hacker types to rake off millions of dollars from the EU carbon trading exchange [via SlashDot]. Worse still, this is far from the first embarrassment of this type that the exchange has suffered from…
As if I needed more reasons to mistrust the wild and wacky world of high-frequency trading [via SlashDot]:
High-frequency trading networks, which complete stock market transactions in microseconds, are vulnerable to manipulation by hackers who can inject tiny amounts of latency into them. By doing so, they can subtly change the course of trading and pocket profits of millions of dollars in just a few seconds […]
[…] the root of the problem is the increasing speed of networks; as they get faster and faster, our ability to actually understand events taking place within them isn’t keeping up. Network monitoring technology can detect perturbations in network traffic happening in milliseconds, but when changes occur in microseconds, they’re not visible, he says.
Basically, if you can exploit these tiny differences in latency, you can make your trade before your rival, and get a better profit. For doing, y’know, sweet f*ck all.
Given that the above article comes from an IT news source, this problem is being framed as a hack or exploit; I dare say there’s a lot of trading firms who’d see it as more of a “competitive edge”.