Welcome To Sub-Nanosecond Markets

Tyler Durden's picture

Just as market regulators were finally getting wise to the fact that they have no clue how modern market works, what modern market topology is, or how High Frequency Trading impacts the stock market (think Flash Crash), here comes Certichron, the supplier of a time service center at a Savvis market center in Weehakwen, which says it has now mastered sub-nanosecond readouts which are now "compliant with the FINRA Order Audit Trail System and is likely to be compliant with any Consolidated Audit Trail that might be specified by the Securities and Exchange Commission." In other words, here come sub-nanosecond markets.

For those of you scratching their heads at this development, curious as to how or why on earth anyone would need sub nanosecond time-stamping, you are not alone. Because as a reminder, 1 nanosecond is the time it takes light to travel 30 centimeters. Light. Via fiber-optic cable: which happens to be the medium by which the fastest news (and thus response to) can propagate.

There was a time when the smallest gradient of trading was in the millisecond range, but then HFT algos became collocated at the exchanges so that in response to any one headline, an algo could generate a kneejerk reaction to (whether buy or sell) long before the rest of the trading world was aware what is going on, in the time light moved 300 meters. This is what causes those massive moves up or down in virtually every market once a big, red, all caps BBG headline hits the tape, before any retail trader has the capacity to react. However once you get to the sub-nanosecond space, unless GETCO has found a way to trade backward in time, there is absolutely no way that this increment is even remotely necessary for normal market operation - and by that we mean cause and effect, even purely for robots - for most humans it takes seconds to react to news - alas not for robots, which is a main reason why the market has been so increasingly irrational ever since the passage of Reg NMS. Unless it actually is, and it is being implemented precisely to allow the quote stuffing packets which already occur thousands of times every second (just ask Nanex - a quote packet churn storm is what caused the May 2010 flash crash) to propagate exponentially, to not millions or even billions times per second, but to be virtually unlimited thus activating an even more aggressive momentum waterfall, used solely to generate a burst of directed trades, first discussed here in June 2010, which however then facilitates precisely the instability subsequently covered in Wired.

And that was only at the nanosecond level. We are now entering sub-nanoseconds. Should the SEC or FINRA allow this, prepare for all market hell to break loose, as we get Hurst exponents closer and closer to 1, until we finally hit unity, and SkyNet no longer needs carbon-based lifeforms.

From Traders Magazine:

“As the whole regulatory and business requirements develop over the very near term, subsecnd reporting will be absolutely key,’’ the firm’s president, Tom Kelly said.

 

The system, according to chief technology officer Todd S. Glassey, uses three or more records of a stamp to avoid any technical faults or malicious attempts to reset time. Attempts to reset time or forge records will fail, because the time stamps produced will be wrong, he said.

 

Every record that gets sent out by the service gets verified and any attempt to alter a record gets identified, Kelly said

 

The system uses a hub-and-spoke architecture. The hub at the Savvis center can be accessed by users of the service with “no long lines latency and no Internet liabilities,’’ he said. And “virtually any” load can be handled.

 

The method of setting and verifying time creates “an impossibly strong evidence model,’’ for distributing the kinds of sub-nanosecond time stamps required by algorithmically-driven high-speed trading operations, Glassey said.

Well thank god the system can not be hacked. But wait: why do we need over 1 billion time stamps per second? Oh yeah, because the entire system is now one epically manipulated casino, where fundamentals don't matter, and the only thing that does are burst of micromomentum, which in turn becomes the kind of market landslides with no precipitating volume that can not be explained with anything except for artificial lack of intelligence.

And even greater news, is that soon all gray market venues will be subpennying every limit order placed in by the 3 remaining retail traders, hundreds of billions of times per second.

The Certichron operations center at the Savvis Center at 300 Boulevard East in Weehawken also connects to data centers operated by Telx and Equinix, giving it broad reach across trading venues and trading firms.

 

The Savvis center, for instance, houses the BATS Global Markets Y and Z exchanges. The Equinix center houses the Direct Edge A and X exchanges. Nasdaq is located at a separate Carteret center; the New York Stock Exchange operates its own center in Mahwah, N.J.

All we can tell any remaining retail traders who still think they have an edge against microscalping that will now run practically constantly - good luck.

And in the meantime, instead of girls on trampolines, here is a chart from the Economist that explains all one needs to know.

As for the market even pretending to serve as a venue for capital formation?

0100111101001101010001100100011100100000010010100100101100100000010011000100111101001100

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Reese Bobby's picture

I wrote this in a nanosecond.

AN0NYM0US's picture

in response to your original (and better post)

________________________________________

Reese Bobby


Food for thought for all you day traders.

________________________________________

the operative word being "day"

Ahmeexnal's picture

It's not a feature of the tradebots, but of the underlying Matrix.

 

SHEEPFUKKER's picture

I found nanosecond markets to be quite boring actually.....glad they sped it up. 

Ahmeexnal's picture

What is speeding up is asteroid 2012 DA14 as it warps across the universe in direct collision course with earth on February 15, 2013:

http://neo.jpl.nasa.gov/risk/

mick_richfield's picture

Hey, could we start a market for that on Intrade?

I'll bet you fifty bucks that it doesn't kill me.

Harlequin001's picture

who gives a shit? Apparently we'll all be dead in 2012...

AbelCatalyst's picture

Um, the data showed a 2020 date... Maybe I read it wrong...

CrazyCooter's picture

I, for one, welcome this news ... at first, it was seconds, then it was milli seconds, then micro seconds ... now, nano seconds.

One day, soon, thunder will clap and lightening will strike over a CompSci lab in upstate New York. It will be a dark, fearful scene, not unlike the old horror movies of the house on the hill. There, in this moment of scientific brilliance, the market will denominate, not by milli, not by micro, and not by nano, but by ... zero.

Then, there shall be a brave new world.

Me, at this moment T (plus 1 really, really small unit) I will still have my testicles (I will check - it will be scary). I will travel outside (in the amount of time it takes to flip Apple infinitely) and realize the dirt is still there and it is still raining. Fish will still be in my freezer. My food stash, still intact. Silver? Check. Gold? Check.

Markets ... yeah ...

Good buy paper! Hello commodities!

Regards,

Cooter

Harlequin001's picture

and if you have anything to sell, maybe we can discuss it personally, and trade properly once again, just like they used to...

in something other than paper. Did I just describe a 'black market'?

Urban Roman's picture

Or, as your grandparents would have called it, a "market".

sitenine's picture

@ Ahmeexnal

Rubbish! This is the data you need:

http://neo.jpl.nasa.gov/cgi-bin/ip?1.3e-05

Do you understand what impact probability 1.3e-5 means?  It means 99.9987% chance the asteroid will miss the Earth.  The chance that thing hits the Earth is about the same odds the Fed has at 'solving' the financial crisis.

Harlequin001's picture

So there's a chance then...

JoBob's picture

And even if it hits the energy release would be about 2.2 megatons. That would be a local inconvenience, not a catastrophe. It will give the nut cases something to occupy themselves with.

Oztralian's picture

which is incidentally the chance Ron Paul has of winning the nomination and presidency (1.3e-5)

Reese Bobby's picture

I decided not to stir up all the day-trading newbies steaming towards poverty.  I've watched them multiply like mold spores near every market top for longer than I care to admit.  They are almost all "men" supported by someone else: usually a parent, spouse or other relative.  Baaa, Baaaaah.  Depressing.

kill switch's picture

 109 s).

 

You couldn't read this in three minutes

 

It takes you three hours to watch CBS's  60 minutes

max2205's picture

micromomentum is where you make real coin folks. Get used to it.

It real fun when the VIX is above 30 too.

The future is , wait for it, micromomentum.... Too late. Hahabhab

Bill D. Cat's picture

My sexlife is timed the same way .

gdogus erectus's picture

At least light travels 11.7 inches in one nanosecond.

The trend is your friend's picture

When skynet goes live and becomes self aware, it will destroy the enemy(Humans) by destroying all their percieved wealth....in a .wait for it.....sub nano second

Harlequin001's picture

not mine old stick, I've got gold...

Bernankster's picture

This is great news!  I'll be able to print digital money faster than any ever.

Harlequin001's picture

but you still won't be able to keep up...

ClassicalLib17's picture

@ ReeseBobby,  I'm not a trader, and I don't understand why you got four junks for your comment?

MountainMan's picture

Beam me up, bitchez.

Timmay's picture

May the Farce be with you....

Lotus's picture

i just put some WD-40 on my hard drive. its all out fcking war

 

arkel's picture

I took the time to log in just to give you a +1. That was funny.

Indrid Cold's picture

Same here, that was just choice.  Had me laughing.  And, Gawd, I need a laugh.

Element's picture

Western Digital 40 meg huh? ... killer!

billsykes's picture

Why don't they open up an old school trading pit somewhere in the US or where ever, open outcry, clients need a guy in the pits duking it out. All trades cleared thru the pit.

Brokers would love this and clients wouldnt have to compete against algo's, sure they would pay a bit more and there may be some pit slipage but overall a more fair market auction system.

 

LowProfile's picture

You answered your own question.

Goldilocks's picture

My PlayGround » Binary Conversion » Binary to Text (ASCII) Conversion
http://www.roubaixinteractive.com/PlayGround/Binary_Conversion/Binary_To...

01100010011010010111010001100011011010000110010101111010

I am a Man I am Forty's picture

I'll save everyone some time...

"OMFG JK LOL" is the answer to TD's question above..

and the other code directly above says "Bitchez"

 

 

BKbroiler's picture

awesome, cause what we really need is a 10,000 point DJI flash crash, give everybody a heart attack who deals in the financial world.  Seriously.

Cursive's picture

@BKbroiler

They'll just break the trades, like before.  Remember, it's a rigged casino.

StychoKiller's picture

How many daze in a row do the "circuit breakers" have to trip BEFORE someone figures out that something's seriously broken?

Free my financial Robot bruthas!

rsnoble's picture

I forgot to mention......does this mean I should stop trying to daytrade with dialup??? LMAO.

Harlequin001's picture

Dialup's good. Just ley me know what you want to buy...

gimli's picture

I want to see all those time stamps ........ and I want to sell them all the ink cartridges they'll be using 

max2205's picture

Lol. ! And a GNP kicker too

CvlDobd's picture

Didn't Nanex find evidence of a trade being filled prior to the quote being available not too long ago?

CvlDobd's picture

That's the stuff.

 

I have yet to unlock the keys to the search feature here.

Silver Bug's picture

The markets have gone absolutely insane!

 

Charms and beads

max2205's picture

Pretty soon it'll take pointing Hubble at the NYSE to figure out what the hell happened two seconds ago.