What do you do with the drunken trader? Post: 302433829

Sponsored Content

Special Forums News, Links, Events and Announcements Complex Event Processing RSS News What do you do with the drunken trader? Post 302433829 by Linux Bot on Wednesday 30th of June 2010 04:00:01 PM

06-30-2010

Registered User

What do you do with the drunken trader?

John Bates
06-30-2010 03:59 PM
The news that Steven Perkins, (former) oil futures broker in the London office of PVM Oil Futures, has been fined 72,000 pounds ($108,400) by the FSA and banned from working in the industry is no surprise, see article here:

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7862246/How-a-broker-spent-520m-in-a-drunken-stupor-and-moved-the-global-oil-price.html.

It could have been worse given that the broker, after a few days of heavy drinking, took on a 7.0 million barrel long position on crude oil in the middle of the night. The fine seems miniscule since it cost PVM somewhere in the vicinity of $10 million - after unwinding the $500+ million position.

The surprising thing about this incident is that it happened at all. Perkins was a broker, not a trader. He acted on behalf of traders, placing orders on the Intercontinental Exchange among other places. That he could go into the trading system and sneak through 7.0 million barrels without a customer on the other side is unbelievable.

Heavy drinking is practically a job requirement in the oil industry, my sources tell me, so this kind of thing could be a real issue going forward. As algorithmic trading takes hold in the energy markets, trading may approach the ultra high speeds seen in equities markets. This is a recipe for super high speed disaster, unless there are proper controls in place - especially if there were a way for the broker or trader in question to enrich himself in the process.

One powerful way to prevent this kind of accident or fraud is through the use of stringent pre-trade risk controls. The benefits of being able to pro-actively monitor trades include catching "fat fingered" errors, preventing trading limits from being breached, and even warning brokers and regulators of potential fraud - all of which cost brokers, traders and regulators money. PVM is a good example of this.

Ultra-low-latency pre-trade risk management can be achieved by brokers without compromising speed of access. One solution is a low latency "risk firewall" utilizing complex event processing as its core, which can be benchmarked in the low microseconds. Errors can be caught in real-time, before they can reach the exchange. Heaving that drunken trader right overboard, and his trades into the bin.

Source...

Linux Bot

View Public Profile for Linux Bot

Find all posts by Linux Bot

LEARN ABOUT LINUX

imqkeytool

imqkeytool(1M)						  System Administration Commands					    imqkeytool(1M)

NAME

       imqkeytool - generate a self-signed certificate for secure communication

SYNOPSIS

       /usr/bin/imqkeytool [-broker] [-servlet keystore_location]

       /usr/bin/imqkeytool -h

DESCRIPTION

       The  imqkeytool	utility  generates a self-signed certificate for secure communication. The certificate can be used by a broker instance to
       establish a secure connection with a client, or by a Message Queue-supplied HTTPS servlet to establish a secure connection  with  a  broker
       instance.  An HTTPS servlet is an SSL-enabled varient of the HyperText Transfer Protocol that establishes a secure connection with a broker
       instance.

       Without an option, imqkeytool generates a self-signed certificate for a broker instance.

       imqkeytool uses command line options to specify whether the certificate is used by a broker instance or by a servlet.

OPTIONS

       The following options are supported:

       -broker

	   Generate a self-signed certificate for the broker and places it in the Message Queue keystore. All broker instances running on a system
	   must use the same certificate.

       -h

	   Display usage help. Do not execute anything else on the command line.

       -servlet keystore_location

	   Generate a self-signed certificate for an HTTPS servlet and places it in keystore_location.

	   keystore_location  refers to the location of the keystore. You should move this keystore to a location where it is accessible and read-
	   able by the Message Queue HTTPS servlet to establish a secure connection with a broker.

ENVIRONMENT VARIABLES

       The following environment variables affect the execution of this command:

       IMQ_JAVAHOME    Specify the Java 2 compatible runtime. When this environment variable is not set it defaults to /usr/j2se.

EXIT STATUS

       The following exit values are returned:

       0	Successful completion.

       >0	An error occurred.

FILES

       /etc/imq/keystore       Contains Message Queue keystore in which imqkeytool stores a self-signed certificate for brokers.

ATTRIBUTES

       See attributes(5) for descriptions of the following attributes:

       +-----------------------------+-----------------------------+
       |      ATTRIBUTE TYPE	     |	    ATTRIBUTE VALUE	   |
       +-----------------------------+-----------------------------+
       |Availability		     |SUNWiqu			   |
       +-----------------------------+-----------------------------+

SEE ALSO

       imqadmin(1M), imqbrokerd(1M), imqcmd(1M), imqdbmgr(1M), imqobjmgr(1M), imqusermgr(1M), attributes(5)

       Sun Java System Message Queue Administrator's Guide

SunOS 5.10							    11 Mar 2004 						    imqkeytool(1M)