News organizations respond to Fed lockup questions
cnbc.com
cnbc.com
It looks like there's plenty of opportunities for the information to leak out of the lock-up early - for example: Print reporters were told they were allowed to open a phone line to their editors at headquarters offices a few moments in advance of the hour, but not allowed to interact with people on the other end of the line until exactly two p.m.
A print reporter could prearrange to call one phone number at their office for "taper" and another for "no taper".
Some details: http://online.wsj.com/article/SB1000142405270230406570457742...
Sounds like the most reasonable explanation to me.
But of course I'm not 100% sure what a lock-up room is. It's being described as reporters restricted from speaking before 2pm. Obviously, that has nothing to do with millisecond precision.
The NYSE mandates that business clocks never drift more than 1s from the atomic clock [1]. What is the resolution guaranteed between the two clocks being compared? After all, it's impossible to guarantee perfect synchronization of two clocks at any distance (bounded by the speed of light and the drift rate of the clocks) [2].
The only retort I can think of is why do the other players react at the proper time.
[1] http://www.nyse.com/nysenotices/nyse/rule-changes/detail;jse...
[2] Cristian, F. (1989), "Probabilistic clock synchronization", Distributed Computing (Springer) 3 (3): 146–158
Just curious, how much difference could this "several milliseconds" have made?
Most high-frequency trading systems could actually execute an entire tranche of selling in that epoch.
Consider the Hibernian Express fibre-optic link from NY to London, commissioned this year. A quarter of a billion dollars spent to shave 6 milliseconds off the transit time.
Price of front running.
It would seem conspicous outlay could be competitive to signal a defensible business model where such outlay doesn't actually return itself but deters competition.
They allow this game of "being first" by milliseconds to make someone more money. Doesn't have to be that way, but they let it happen, so it says a lot about their mentality.
I have trouble seeing how implementing something like this would negatively impact upon any trading necessary to support the economy.
"By one estimate, as much as $600 million dollars in assets changed hands in the milliseconds before most other traders in Chicago could learn of the Fed's September surprise"
whoever leaked it probably had a connection that gave them an incentive greater than their career or any fines the government could impose.
career reputation + fines < %cut of income from arbitrage
If information can travel FTL then causality would be mutable.
That doesn't carry the implied premise that causality is immutable. I don't think that has yet been proven. In fact, if causality _is_ mutable, it might be possible to prove that it isn't even though it is.
Can of worms...
Good luck with that.
Fixed.