[EMAIL PROTECTED] wrote on 2003-12-22 22:22 UTC: > Consider a Dutch auction: the price is lowered in a predictable way, and whoever > bids first buys at the current price. In order to handle this in a distributed > environment, we must be able to determine who bid first accurately.
I have yet to see even the slightest plausible argument, for why financial transactions need to be timestamped in a distributed way with an accuracy better than a few seconds. Even in the markets where demand and supply change fastest, namely electricity and telecommunications, supply and price adjustments can be negotiated comfortably on a minute per minute basis, because demand over time is well characterised by a low-frequency signal (main spectral energy below 100 millihertz) plus high-frequency noise with well-understood autocorrelation. What I'd like to see is an economic argument that mankind at large actually gets some real benefit (improved productivity, increased stability of markets, etc.) out of a global subsecond legal and trading infrastructure. Legal contracts and trades in the end reflect changes in human expectations, plans and desires. The human brain can't refocus its attention from one object to another faster than about 200 ms (a timing tolerance that was referred to in the introduction of DUT1), which gives us an absolute lower hardware bound for how fast human desires could possibly change over time. Concious decisions involve evaluating a series of options and take at least several seconds. Then there is an at least 300 ms delay from any concious decidion to a measureable reaction of a human actuator (the famous P300 EEG signal before the finger presses the decision button) in the best case, which extends to several seconds at least in more complex practical situations. I know more about distributed computing and neurobiology than economics and "real-time" arbitrage trading, but my instrincts tell me that there is no real need for subsecond timestamping in trading. Accellerating markets to enable them to make major supply and price changes automatically with subsecond resolution just shortens the timeconstants of the control loop equations involved and removes the ability for humans to oversee what is actually going on. That sounds like calling for instability and increasing the noise amplitude, which I doubt can be justified with any actual economic benefits. Rules such that all computers involved shall be synchronized to UTC within about 1 second accuracy and all contracts timestamped within 3 seconds count as legally simultaneous sound perfectly suited to me to fullfill actual requirements. I suspect the actual requirements in trading are more for exact and unambiguous rules and regulations for how to deal with and interpret timestamps, rather than for actual subsecond accuracy. I don't expect to see caesium fountains being installed in Wall Street offices any time soon. Markus -- Markus Kuhn, Computer Lab, Univ of Cambridge, GB http://www.cl.cam.ac.uk/~mgk25/ | __oo_O..O_oo__