A Russian programmer named Sergey Aleynikov was picked up this past Friday by the FBI for allegedly stealing and passing along code that, if circulating out in the wild, could expose US markets to manipulation and cost Aleynikov's former employer, Goldman Sachs, millions.
If you have your hands on the code that runs on Goldman's trading platform—again, one of the largest in the world—then you know with 100 percent accuracy which trades Goldman's computers are going to make in response to a given set of inputs. All you need then is even faster hardware so that you can get to those trades just a few milliseconds before Goldman, and you'll always beat the bank and therefore be able to sell to Goldman at a slight premium. Goldman will therefore make less on every trade, since you'll essentially be usurping their place in the pecking order.
The NYSE puts out a weekly list of the top program traders by volume, and Goldman typically tops this list by a country mile. Then last week's list came out, and Goldman's name was shockingly absent. And today, now that the code theft story is out, the NYSE has put out a statement claiming that Goldman's absence on the list was the result of a "system error;" it has also released a revised list showing Goldman once again dominating program trading activity.
Source: Ars Technica
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