No honour amongst code thieves August 19, 2009
Posted by James Webster in : finance, development , add a commentIts interesting that there have been a few stories about theft of code relating to trading systems lately…
The first to break in July was the story of ex-Goldman Sachs developer Sergei Aleynikov taking algorithmic trading code from his former employer. This event also seemed to be the impetus for greater scrutiny of the high-frequency trading that Goldman Sachs and many other Wall St players use to get their edge and increase alpha, albeit at the expense of retail traders. This prompted some exchanges/ECNs to reconsider their policy surrounding flash orders.
The second story broke in August; an Australian derivatives trading firm Optiver is suing a newly established rival, Tibra, over allegations that the trader who left the former to form the latter took core trading software at the heart of Optiver’s competitive advantage.
The significance of these stories is that they highlight the ‘technological arms race’ that pervades the professional end of certain markets (equities in particular). Whether these alleged thefts actually could benefit their recipients is arguable; however the increased information security regulations that will be imposed on their former colleagues are likely to have a negative impact on productivity and collaboration.