Saturday, October 13, 2012

A new level of Power... to attack and cripple your opponent with complete anonymity.  Fearing no reprisal, and causing your opponent untold frustration and embarrassment.

This is part of the "warfare" of the future:  the ability to destroy order and optical institutional backstops such as legal processes, open markets, electronic grids, etc.  The conquest of physical territory, heretofore the primary goal of military action, is now a distant secondary objective.

This is why the article below is of great importance in my thinking.  The relatively benign explanations (a HFT algorithm testing the markets) are not nearly as interesting as contemplating the implications of a foreign interloper executing what amounts to a massive DDOS attack on American exchanges, and doing so with relative anonymity.

It is also worth mentioning that the business model for many Fortune 100 companies are entirely dependent on internet connectivity, and the risks accompanying that depedenency (and the decidedly non-linear outcomes should problems materialize) have not, in my opinion, been accurately reflected in their prices.  The "known unknowns" have been computed in kind, but not magnitude.

Full article here.

A single mammoth mystery algorithm has set alarm bells ringing for market regulators and players, and underlined the market’s vulnerability to technology and the woeful lack of regulation on algorithms.
A single algorithm last week placed and cancelled orders on the Nasdaq accounting for 4% of all quoted traffic in the US. Not only this, it also accounted for a colossal 10% of the bandwidth that is allowed for trading on any given day.

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