Roopinder Singh, owner of XP-Dev.com speaks up: ( repository of Goldman Sachs HFT code )
“Outage” – a word that comes with so much burden and disgust, especially nowadays with the advent of cloud computing, most users expect a full 24×7 uptime, regardless of the service. However, the reality of it is that even services like Google App Engine can go down. Most of these outages are down to very common events (and boy, we’ve heard our share of them!) like disk failures, security breaches, network outages and even data center fires. Hey – even lightning can strike the cloud, right ?
When XP-Dev.com disappeared off the internet on 6th July 2009 at 15:20 BST, I immediately thought that it was one of the usual reasons. However, when I realised that all XP-Dev.com servers (we have a few of them) disappeared, I began to panic. For a moment, I thought that something really bad had happened – I mean, to the extent that it was the end of the internet as we knew it.
After trying to diagnose the situation for 30 minutes or so, I called up the service providers and they basically told me that they couldn’t tell me what had gone wrong. All they could say was that their infrastructure was working fine, but they had to disconnect my servers. Apparently, the only person that had the authority to tell me what was going on had gone back home for the day, and I had to wait till the morning. I found that really odd, and began to panic even further! Was it a security breach ? Was one of my processes doing something really sick and affecting others in the data centers ? Or maybe Goblins just came out and started eating away at the data center. I even re-read their Terms of Service and Policy Notes to double check that I had not done anything “out of the ordinary”.
At around 9pm BST, I get a call from the “local authorities” (I can’t say who they are right now, but rest assured that they are valid local UK authorities that have jurisdiction in UK) saying that they wanted to visit me at home to discuss XP-Dev.com. I just blew my mind at this point – what in the world happened on XP-Dev.com to make these guys visit me at home ?
It turns out that
some idiotic morona user had uploaded data on to the service that he/she was not authorised to have. This is your basic intellectual property theft case that we’re talking about here. The local authorities had to take all the server hard drives for examination, and I was told that someone will be in contact with me the following day (i.e. 7th July 2009).
For more, follow link:
The Story So Far – Why XP-Dev.com Was Down For 45 Hours
Web manager won’t say if others saw Goldman code
Ex-Goldman Programmer Described Code Downloads to FBI
I don’t think “front running” is the issue here. Basically, HFT is a type market making that exits because of the multiplicity of electronic trading venues. A large firm with customer order flow would be in a position to know if an order on the NYSE is firm not unlike a specialist in old days and could use that information to put orders on other platforms in order to facilitate the trade, that’s not illegal. If you deal on an exchange you always “pay” a specialist or maker maker and the question is whether technology (i.e. HFT) has cut prices vs NYSE specialists.
Obviously if your property is stolen you want to claim maximum damage, but I doubt that the code has much value to anybody other than GS, I see this more has a pre-emtive move, deterrent and good chance that it will backfire, because if you are genius coder you don’t need GS, they are numerous alternatives and they pay better. BTW, I don’t know anybody who regards GS as top in the HFT space.
The part I do not quite understand is how some other firm would be able to properly utilize this code. I assume front running involves before the fact knowledge of orders, not detecting after the fact patterns in executed orders.
According to the stats, GS is responsible for 40% of the program trading activity, so it can front run against its own clients. Who else has access to that large a body of order executions? How do the ‘markets’ get manipulated?
So, is this a smoke screen to lock down the code as it will reveal something different about its purposes? Theft of IP shows GS has been harmed and justifies preventive actions – why the need to warn about the possibility of a financial WMD?
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