Somebody Stole 7 Milliseconds From the Federal Reserve

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Last Wednesday, the Fed announced that it would not be tapering its bond buying program. This news was released at precisely 2 pm in Washington "as measured by the national atomic clock." It takes 7 milliseconds for this information to get to Chicago. However, several huge orders that were based on the Fed's decision were placed on Chicago exchanges 2-3 milliseconds after 2 pm. How did this happen?

CNBC has the story here, and the answer is: we don't know. Reporters get the Fed release early, but they get it in a secure room and aren't permitted to communicate with the outside world until precisely 2 pm. Still, maybe someone figured out a way to game the embargo. It would certainly

be worth a ton of money. Investigations are ongoing, but Neil Irwin has this to say:

In the meantime, there's another useful lesson out of the whole episode. It is the reality of how much trading activity, particularly of the ultra-high-frequency variety is really a dead weight loss for society.

....There is a role in [capital] markets for traders whose work is more speculative.... But when taken to its logical extremes, such as computers exploiting five millisecond advantages in the transfer of market-moving information, it's much less clear that society gains anything....In the high-frequency trading business, billions of dollars are spent on high-speed lines, programming talent, and advanced computers by funds looking to capitalize on the smallest and most fleeting of mispricings. Those are computing resources and insanely intelligent people who could instead be put to work making the Internet run faster for everyone, or figuring out how to distribute electricity more efficiently, or really anything other than trying to figure out how to trade gold futures on the latest Fed announcement faster than the speed of light.

Yep. I'm not sure what to do about it, though. A tiny transaction tax still seems like a workable solution, although there are several real-world issues with it. Worth a look, though.

In a related vein, let's talk a bit more about this 7 millisecond figure. That might very well be how long it takes a signal to travel from Washington DC to Chicago via a fiber optic cable, but in fact the two cities are only 960 kilometers apart. At the speed of light, that's 3.2 milliseconds. A straight line path would be a bit less, perhaps 3 milliseconds. So maybe someone has managed to set up a neutrino communications network that transmits directly through the earth. It couldn't transfer very much information, but if all you needed was a few dozen bits (taper/no taper, interest rates up/down, etc.) it might work a treat. Did anyone happen to notice an extra neutrino flux in the upper Midwest corridor at 2 pm last Wednesday? Perhaps Wall Street has now co-opted not just the math geek community, and not just the physics geek community, but the experimental physics geek community. Wouldn't that be great?

http://www.motherjones.com/kevin-drum/2013/09/somebody-stole-7-milliseconds-federal-reserve


Here is a much more detailed and documented look at the theft:

http://www.nanex.net/aqck2/4436.html


Reminds me of that scam AT&T (may have been another telecom) was adding random fees of a 2 cents or less on all their customers. They made millions essentially just taking pennies here and there for no reason until someone caught them.

 

[Mr. Negative]

In a related vein, let's talk a bit more about this 7 millisecond figure. That might very well be how long it takes a signal to travel from Washington DC to Chicago via a fiber optic cable, but in fact the two cities are only 960 kilometers apart. At the speed of light, that's 3.2 milliseconds. A straight line path would be a bit less, perhaps 3 milliseconds. So maybe someone has managed to set up a neutrino communications network that transmits directly through the earth. It couldn't transfer very much information, but if all you needed was a few dozen bits (taper/no taper, interest rates up/down, etc.) it might work a treat. Did anyone happen to notice an extra neutrino flux in the upper Midwest corridor at 2 pm last Wednesday? Perhaps Wall Street has now co-opted not just the math geek community, and not just the physics geek community, but the experimental physics geek community. Wouldn't that be great?

 

[Dafunkdoc_Unlimited]

​

 

[Depreciating Asset]

Illuminati is so far ahead of the rest of society that it's scary.

They are probably already on Mars.

 

[Domingo Halliburton]

computer trading certainly has its place in trading (hell it makes up like 97% of the NYSE). But a lot of these high frequency trades are bullshyt.

 

[88m3]

computer trading certainly has its place in trading (hell it makes up like 97% of the NYSE). But a lot of these high frequency trades are bullshyt.

Between this and the futures trading the whole thing is hard to take seriously.

 

[Kritic]

Illuminati is so far ahead of the rest of society that it's scary.

They are probably already on Mars.

when the rothschild (jewish bankers) took over the fed reserve it was a wrap.

one of the reason they killed kennedy wanted to cause he wanted to do away with the federal reserve.

'... The most powerful men in the United States were themselves answerable to another power, a foreign power, and a power which had been steadfastly seeking to extend its control over the young republic since its very inception. The power was the financial power of England, centered in the London Branch of the House of Rothschild. The fact was that in 1910, the United States was for all practical purposes being ruled from England, and so it is today' (Mullins, p. 47-48).

“I believe that banking institutions are more dangerous to our liberties than standing armies.” –Thomas Jefferson

“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.

 

[newarkhiphop]

http://www.motherjones.com/kevin-drum/2013/09/somebody-stole-7-milliseconds-federal-reserve


Here is a much more detailed and documented look at the theft:

http://www.nanex.net/aqck2/4436.html


Reminds me of that scam AT&T (may have been another telecom) was adding random fees of a 2 cents or less on all their customers. They made millions essentially just taking pennies here and there for no reason until someone caught them.

Yeah I think it was Verizon, they was adding something like less than a half a penny and made a couple hundred million

meanwhile weed dealers get decades

 

[Kritic]

meanwhile weed dealers get decades

that's what they get for fuqqin up big pharma drug money. the real drug pushers.


are you ok? i have a pill for everytime you're not feeling ok.

 

[Good Guy Guevara]

Obviously somebody had the inside knowledge before the announcement. Instead of trading heavily a day or two before they timed it almost perfectly with the press release.

 

[Melt_Man]

Between this and the futures trading the whole thing is hard to take seriously.

If our leaders weren't in the industries pocket a tiny tax per transaction would be a perfect solution. I remember reading an article a few years back about warehouses upon warehouses of servers in NJ with the sole purpose of giving a broker a microsecond increase in their trading time. Seems like such a poor allocation of resources.

 

[Kritic]

If our leaders weren't in the industries pocket a tiny tax per transaction would be a perfect solution. I remember reading an article a few years back about warehouses upon warehouses of servers in NJ with the sole purpose of giving a broker a microsecond increase in their trading time. Seems like such a poor allocation of resources.

search your google history and pull try pull it up...

 

[Melt_Man]

search your google history and pull try pull it up...

No luck finding the original but this is a much more recent article that isn't as specific but gives you some idea about how much money gets invested in this infrastructure.

http://www.nytimes.com/2013/05/14/t...al-estate-boundaries.html?pagewanted=all&_r=0

The trophy high-rises on Madison, Park and Fifth Avenues in Manhattan have long commanded the top prices in the country for commercial real estate, with yearly leases approaching $150 a square foot. So it is quite a Gotham-size comedown that businesses are now paying rents four times that in low, bland buildings across the Hudson River in New Jersey.

Why pay $600 or more a square foot at unglamorous addresses like Weehawken, Secaucus and Mahwah? The answer is still location, location, location — but of a very different sort.

Companies are paying top dollar to lease space there in buildings called data centers, the anonymous warrens where more and more of the world’s commerce is transacted, all of which has added up to a tremendous boon for the business of data centers themselves.

The centers provide huge banks of remote computer storage, and the enormous amounts of electrical power and ultrafast fiber optic links that they demand.

Prices are particularly steep in northern New Jersey because it is also where data centers house the digital guts of the New York Stock Exchange and other markets. Bankers and high-frequency traders are vying to have their computers, or servers, as close as possible to those markets. Shorter distances make for quicker trades, and microseconds can mean millions of dollars made or lost.

When the centers opened in the 1990s as quaintly termed “Internet hotels,” the tenants paid for space to plug in their servers with a proviso that electricity would be available. As computing power has soared, so has the need for power, turning that relationship on its head: electrical capacity is often the central element of lease agreements, and space is secondary.

A result, an examination shows, is that the industry has evolved from a purveyor of space to an energy broker — making tremendous profits by reselling access to electrical power, and in some cases raising questions of whether the industry has become a kind of wildcat power utility.

Even though a single data center can deliver enough electricity to power a medium-size town, regulators have granted the industry some of the financial benefits accorded the real estate business and imposed none of the restrictions placed on the profits of power companies.

Some of the biggest data center companies have won or are seeking Internal Revenue Service approval to organize themselves as real estate investment trusts, allowing them to eliminate most corporate taxes. At the same time, the companies have not drawn the scrutiny of utility regulators, who normally set prices for delivery of the power to residences and businesses.

While companies have widely different lease structures, with prices ranging from under $200 to more than $1,000 a square foot, the industry’s performance on Wall Street has been remarkable. Digital Realty Trust, the first major data center company to organize as a real estate trust, has delivered a return of more than 700 percent since its initial public offering in 2004, according to an analysis by Green Street Advisors.

The stock price of another leading company, Equinix, which owns one of the prime northern New Jersey complexes and is seeking to become a real estate trust, more than doubled last year to over $200.

“Their business has grown incredibly rapidly,” said John Stewart, a senior analyst at Green Street. “They arrived at the scene right as demand for data storage and growth of the Internet were exploding.”

Continued in link.

 

[Domingo Halliburton]

no joke, big banks are talking about moving mountains out of the way between chicago and NYC so signals can move faster between them.

 

[Meta Reign]

It's totally rigged. Most Americans have zero dollars in the stock market, and even less have money in any sort of commodities futures or currency market. . . So this begs the question. Who really benefits from the American stock/bond/futures market? An even better question is, who gets hurt by it? . . . You. The American money markets are no longer tools of wealth generation as they are tool of wealth transfer from the poor and the middle class to the rich and super rich.