A workweek ago , the Federal Reserve announced something or another about bonds , a move that send the bond market place into a frenzied orgy of bond load and unloading . So what , right ? The markets quiver whenever the Fed does anything . Well , weirdly , it appears the information got out five msec too soon . Which would n’t matter , except that those petite fraction of seconds are a lifetime to the high - fastness trading computing machine that run our markets .
So here ’s what happened . Somehow , somebody in Chicago got the news too soon . Usually , it takes seven milliseconds for the news show to journey from where it ’s sent out in New York to Chicago . But some traders in midwest appear to have cheated physics because they started trade 2 - 3 msec after the news strike the telegram , giving them an ever - so - slight theoretic reward .
Five milliseconds is nothing . Unless you ’re think in footing of clock speeds . In cycle per moment , it ’s an eternity .
Traders react to Fed news do n’t even have time to think . They do n’t have to . Instead , pre - programmed , high - frequence trading organization oppose for them the instantaneous news smash , buying and betray and hedge and gambling quicker than the hurrying of light . They ’re all hop to reach the tiniest sharpness on the marketplace . So in fact , five milliseconds could mean everything .
The simplest explanation for this particular position is that somebody get the news early . Reporters and analysts are give the news in progression , but they ’re all bound by an embargo , and follow the Fed ’s exacting lock - up routine . They ’re literally lock in a room and forbidden from communicate with the away world . According to CNBC , though , these lock up procedure are under probe , as it seems it ’s not percipient whether communicating with the external humankind includes preemptively loading entropy into a waiter .
An inadvertently break embargo might just explicate the five msec reward . Because even the degraded , grim - latency trading system in the humanity ca n’t beat the laws of natural philosophy , correct ? RIGHT ? ! [ CNBCviaMoJo ]
Stock marketplace
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