About this Blog

This blog has been created by the Risk Management Program at Concentric to better understand the security implications surrounding High Frequency Trading.

The ‘Flash-Crash’ of May 6th 2010 could be regarded as a proof of concept attack against critical financial infrastructure.  While the causes of the crash are still unknown the investigation has revealed a complex and vulnerable system.  The large-scale adoption of High Frequency Trading in the past two years has dramatically altered the landscape of the financial system. Symbolically, this is most pronounced when considering the re-location of critical trading functions away from Wall Street to the suburban town of Mahwah, New Jersey, where the vast data centers supporting the technical trading systems are located.  This movement is being replicated around the world.  However, in conjunction with this geographic re-alignment the virtual vulnerabilities of an emerging system are also becoming apparent as technical financial algorithms leave their trail across the market.

When technology changes any system so fundamentally, security risks emerge in the unregulated and little understood areas of  the new system.  This blog is an attempt to define those security challenges and offer some solutions.  The problem statement page will highlight what we currently perceive to be the dominant emerging security risks surrounding High Frequency Trading.  Risk Management Solutions will be considered to meet these challenges.

Roderick Jones

CEO/President

Concentric Solutions International

(O) +1415 9754035

(E) rjones@concentric-intl.com