High-tech markets out of control?

The culprit in the May 6 "flash crash" may well be high-volume computerized trading.

Andrew Tangel writes in today's Bergen Record, a New Jersey newspaper, that a high-tech trading arms race looks to many to be out of control.  "Many market observers fear" the new techniques and strategies "may have overtaken the ability of man to control."

Warehouses full of financial computer gear sit across the Hudson from Wall Street where traders follow banks of monitors, hoping to profit from split-second advantages against others, Tangel reports. "What matters is that you're faster than the other guy," one trader told him.

Bryan Harkins, an executive of Direct Edge, which now commands the third largest market share, is quoted: "The U.S. market is cutthroat competitive. It's a technology arms race that continues to intensify and accelerate."

Well, I suppose we can expect other glitches like the temporary evaporation of $1 trillion in a 700-point plunge that occurred within 20 minutes on May 6.

At any rate, compliments to Tangel and the Record for taking up the challenge to take a crack at what might have been behind the flash crash, with the caveat that the report does not specifically address the issue of whether there was any expert opinion that pointed to deliberate manipulation.

Also kudos -- with the same caveat -- to the Associated Press reporter Bernard Condon, who wrote a similar story. He quotes Manoj Narang, head of Tradeworx of Red Bank, N.J., as saying his computers can make a trade within 15 millionths of a second after detecting an opportunity. Narang likens what his computers do to picking up pennies. But they can vacuum up a lot of pennies in short order.

Critics say split-second computer trading is a recipe for disaster, writes Condon, but his report indicates that not all comment is negative.

The federal government is warning businesses to begin paring personal information stored in computer systems down to the bare minimum needed to achieve business objectives.

The National Institute of Standards and Technology's cybersecurity component urges businesses and other organizations to develop protocols for dealing with security breaches into data banks containing such information.

The feds and a number of businesses have been embarrassed by security breaches cases wherein the personal data of hundreds of thousands of people have been compromised.

Examples of personal data given by NIST include:

# Full name, maiden name, mother's maiden name, alias

# Personal information numbers, such as those for Social Security account, passport, driver license, taxpayer identification, financial account or credit card

# Address information, such as street or email address

# Property information, such as numbers for vehicle identification (VIN), title and so forth

# Personal characteristics, such as a photo (especially of a face or other identifying characteristic), fingerprints, handwriting sample or other biometric data, including retina scan, voice signature or facial geometry information

# Medical and employment information

# Information linkable to one of the above; that is, information that could plausibly lead to some of that data

We should note that if someone hacks into a business account, they may be able to discover which terminals have been used for what purposes by checking the web use audit log against user passwords stored on an executive control program.

An awful lot of hassles would evaporate if people would bite the bullet and use random number passwords which can be remembered as easily as one's phone number. (In fact, one could arbitrarily select two phone numbers from a phone book and string them together.) A useful random number generator is found at Random.org

Though the matter of privacy isn't strictly about censorship, it is important that those who disseminate thoughts that are objectionable to someone or other learn to take whatever precautions are available in order to lessen the possibility of censorship by disruption.

Of course, once a dissident journalist has come to the attention of securocrats, countermeasures against privacy invasion are extremely limited, which is why I don't lose sleep over trying to figure out how to outwit the disruptors.