Donald MacKenzie

On 21 April​, the financial trader Navinder Singh Sarao was arrested in West London. The US authorities are seeking to extradite him to stand trial in Illinois after charges were issued against him by the US Department of Justice. The DoJ alleges he was in the habit of ‘spoofing’ futures markets, by entering orders without genuinely intending to buy or sell, and that this...

A data centre​ is a room or an entire building housing computers, network connection equipment and telecommunications links. Many data centres are built for the exclusive use of just one company, such as Google, but others host – and interconnect – systems belonging to many different users. One of the world’s largest multi-user data centres was once a high-volume...

The beams are infrared, which means you can’t see them, but lasers are now flashing stock-market data through the skies over New Jersey. If they work well there, they might soon be flashing over London too. Lasers are the latest tool for high-frequency trading: the fast, entirely automated trading of large numbers of shares and other financial instruments. Originally, the data needed for high-frequency trading travelled almost exclusively via fibre-optic cables, in which signals move at about two-thirds of the speed that light travels in a vacuum.

Three years ago, the Bank of England set out to calculate a figure that does more than any other to shatter banking’s preferred image of itself. The figure made its first, understated appearance in March 2010, when Andrew Haldane, the Bank’s Executive Director for Financial Stability, included it in a talk in Hong Kong, then reappeared later that year in a chart buried at the back of the December issue of the Bank’s Financial Stability Report. The figure was the size of the subsidy that taxpayers give to British banking just by virtue of being available to bail out banks if things go badly wrong.

What goes on in stock markets appears quite different when viewed on different timescales. Look at a whole day’s trading, and market participants can usually tell you a plausible story about how the arrival of news has changed traders’ perceptions of the prospects for a company or the entire economy and pushed share prices up or down. Look at trading activity on a scale of milliseconds, however, and things seem quite different. When two American financial economists, Joel Hasbrouck and Gideon Saar, did this a couple of years ago, they found strange periodicities and spasms. The most striking periodicity involves large peaks of activity separated by almost exactly 1000 milliseconds: they occur 10-30 milliseconds after the ‘tick’ of each second.