Time traveller trades from space

Regulators in Europe and the US are struggling to get to grips with trades that appear to be travelling back in time. …

As trading speeds have become faster, driven in part by the rise of high-frequency trading, it has become increasingly necessary to track trades that may have taken only milliseconds. It is here that differences in measured time, even minute ones, can cause trouble. …

This is a problem for regulators, who are attempting to establish a clear audit trail in the name of transparency. Until now, in Europe there has never been a requirement for a standardised measure of time, while in the US, there is an obligation but it only requires time to be kept to within one second of UTC – an eternity, in the microsecond timescales of modern high-frequency trading. In response, the European Securities and Markets Authority has launched a consultation in which it proposes introducing an obligation on trading firms to keep time accurate to within a microsecond – one-millionth of a second. Meanwhile in the US, it has been raised in the Senate and FINRA, the SEC and the FCA are examining the issue.

Several commercial solutions exist. In the UK, the NPL has signed a deal with trading technology company Intergence to deliver a new service called NPLTime, which promises to provide a precise time signal directly traceable to UTC and independent of GPS. That system uses underground fibre-optic cables to connect directly to UTC. The time is kept accurate by atomic clock, which is continually monitored and updated to within 100 nanoseconds of UTC. A nanosecond is one billionth of a second. Meanwhile, FSMLabs has built a software and hardware combination called TimeKeeper, which also seeks to prevent intentional and accidental time errors.

From BankingTech.com