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FB IPO debacle caused by a trade delay of 5 ms instead of expected 3 ms. | 393 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
FB IPO debacle caused by a trade delay of 5 ms instead of expected 3 ms.
Authored by: Anonymous on Saturday, May 26 2012 @ 01:08 PM EDT
The news report I heard says that they have put aside a few million to deal
with claims. I'm also sure I read something in my online banking agreement that
says the bank is not responsible for losses due to delays. Complaining that you
lost because your trade took a few milliseconds longer to execute and you
couldn't flip your shares won't win much favour, and may bring back calls to try
and get the gamblers out of the market by bringing in holding rules

[ Reply to This | Parent | # ]

FB IPO debacle caused by a trade delay of 5 ms instead of expected 3 ms.
Authored by: NilsR on Saturday, May 26 2012 @ 03:10 PM EDT
What kind of hardware is NASDAQ using? We know their computers are insecure. Perhaps this is an indication they use Windows?
Linux it seems... Oops! ;)

---
NilsR

[ Reply to This | Parent | # ]

Windows?
Authored by: tiger99 on Sunday, May 27 2012 @ 09:53 AM EDT
Well, I don't believe that you can get to 5ms, far less 3ms, with a manifestly non real-time OS. In any case, if they are running the system like that, they really need hard real time, with guaranteed response times, which mandates very special hardware as well as the OS.

Systems which attempt to obtain reliable hard real time on any normal OS always fail, most often with embarassing, or even catastrophic, consequences.

If the trading system is being run like that, it must be fully deterministic, because if not, sooner or later someone who loses as a result will sue them out of existence.

[ Reply to This | Parent | # ]

Crocodile tears...since I get 3 hours if lucky...and fall was obviously on the way (n/t)
Authored by: Anonymous on Sunday, May 27 2012 @ 04:24 PM EDT
n/t

[ Reply to This | Parent | # ]

FB IPO debacle caused by a trade delay of 5 ms instead of expected 3 ms.
Authored by: Anonymous on Tuesday, May 29 2012 @ 07:23 PM EDT
I'm a pro trader and there is considerable misinformation in the above post and
some of the replies.

The trading platform was actually dead meat for quite awhile, not just a few
milliseconds. Search at ZeroHedge for a heck of a lot more *honest and
detailed* information there. http://www.zerohedge.com/ Also, you might want to
look at Nanex and search there, where they document some interesting issues with
high frequency trading and how hard it is to keep it all in sync - and we are
not working with milliseconds at all here, but microseconds AT MOST.

Yes, special purpose hardware is used throughout, but Linux is indeed used on
some of it - the whole trading setup is probably in some sense the largest
supercomputer on earth, and usually the most time-deterministic, though
"faster than light" trades have been recorded by probes inserted by
Nanex on occasion (see zerohedge for more).

I'm sorry, but investing has been dead for decades - if you bought and held any
market index since ten years back, you've lost not only nominal dollars, but a
serious amount of purchasing power, since the government CPI numbers are so
cooked it's not funny - they have a vested interest in not telling the truth -
look up "hedonics" for a good laugh.
If the new iPhone is twice as fast for the same price, then they record phones
as costing half as much now -- try to get one at their price and see what
happens. Or that if beef gets expensive, you'll eat hot dogs instead...it's all
lies.

You have to trade to make any money in the markets unless you get insanely lucky
- and that's what it is, no one can really predict the future over
"investment" time periods, and it seems many think
"investing" in a company has an effect on that company - it doesn't -
when they sell stock (which is a tiny fraction of 1% of all the trades in their
stock) it's an infinite duration loan they never have to pay back. Nearly all
trading is with other traders.

The given reason the Faceplant IPO was hosed was the idiotic allocation to
retail investors, something almost never done before. People were actually
opening trading accounts just to get a piece of this hot rod. Truth is, valued
by fundamentals, they're worth $4-5 a share, that is, if their profits and
margins don't continue *going down* as they did last quarter.

This is why retail is normally kept out of IPOs till price discovery by experts
has happened. Letting the gullible in to get their faces ripped off by the
markets was a very nasty and bad thing to do...

The exchange just couldn't handle all the new players coming online all at once
and all on that one issue, and trade confirmations were very much delayed (all
day in some cases, not milliseconds, gheesh).

Note, that most major IPOs like this flag a market top. Note also, that when a
huge company that obviously has no need for cash to grow goes public, it's so
the knowledgeable insiders can sell out! And they know better what the future
prospects are than you do - and all these dumb sheep fell for the hype and are
getting hurt - and will get hurt worse, and blame the exchange involved, the
markets (which ARE somewhat rigged) and so on, anything but their own stupidity
and lack of experience trading.

Because it's really ALL trading, even what some call "investing" - if
you never sell, you're "donating", not investing.

There are already some (but probably not enough) disincentives to rapid trading.
Get an account (I use TDAmeritrade) and get some day trading flags and see that
you can't use margin anymore, and can't do another trade till that last one
really clears (a couple days). Stay inside those rules and you can trade as
fast as you can click if you're dumb (it does cost money to trade, you know). I
usually get orders filled before I can get my finger off the mouse, in
"bits", and the couple day clearing rarely matters to me the way I
swing trade over day and month periods.

The ticker is the truth, the markets can be very irrational and stay that way
longer than you can remain solvent, and they care not one whit about what you
"believe must be" - none at all. It's largely legalized gambling, but
more like poker than roulette - it's all in knowing the "tells" of the
other people at the table, and if you can't ID the "mark" at that
table - it's you, get the heck out and stay out.

I used to hold the philosophy that if you weren't your own best investment, you
ought to take care of that one first, before doing any other investing. But
what happens when you A: already have done that and have everything that could
help you say, run your business, and B: You're too old to do that anymore
anyway? That's why I trade - I have a modest stake, the social security box up
there at DC is full of nothing but off the books promises to pay via printing
money (we print almost 60% of government spending these days) - and medicare is
in much worse shape than that - they will NOT be able to keep even a fraction of
their promises, so I'm taking personal responsibility to take care of myself the
only way I can, even though I don't love this job - it's honest hard work to
keep up with this crowd of crazy people and algorithms out there well enough to
actually make money.

[ Reply to This | Parent | # ]

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