Milliseconds make a Difference

The Traders Edge

One of the themes I have written about quite a bit is the huge benefits that are garnered from business cycles or reduced timeframes. In fact, probably the greatest ROI opportunities for existing companies lie in the ability to reduce the time it takes to get things done. But, can shaving milliseconds off a transaction time make a difference?

Michael Lewis Flah Boys

Milliseconds Make All the Difference for Stock Traders

I recently read the book “Flash Boys” by Michael Lewis, the same bestselling author who wrote, “Moneyball”. “Flash Boys” provides an insiders view into the world of online trading.

Many people have bought and sold stocks using an online investment account – some people are investors and some are traders. The difference comes down to how long you hold onto the stocks. If you buy and sell in the same day you are a Day Trader; and if you hold for the long term appreciation of a stock, you are a Long-term Investor. These two terms (Day Trader and Long-term Investor), define the two extremes of the timeline on which investments are held.

No matter where a buyer of stock falls on that scale, eventually he clicks “Buy” in his account. “Then what? He may think he knows what happens after he presses the key on his keyboard, but, trust me, he does not. If he did, he’d think twice before he pressed it,” Lewis explains.

Lewis then takes the reader on the equivalent of a ‘cloak and dagger’ mystery, but with real life Wall Street characters and their story. I couldn’t put the book down, and although I have a strong interest in both technology and investing, the story is still very compelling regardless.

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Front-running – the Technology Has Taken Over

The Wikipedia definition of Front-running, “is an illegal practice of a stockbroker executing orders on a security for its own account while taking advantage of pending orders from its customers.” Front-running has been happening since stocks first started trading hundreds of years ago. But as the technology of how stocks were traded changed, front-running also had to change. When stock trading was automated, people figured that the opportunity to front-run a stock trade had disappeared. That is what the general public thought and it is what most of Wall Street thought, but something did not seem right to Brad Katsuyama, an RBC trader who had moved from the RBC Toronto office to New York.

Flash Boys revolves around the story of Brad and his search to explain what could not be explained. As Brad uncovers the truth, with a team of unlikely colleagues, he not only educates himself, but ends up exposing the workings of the high-frequency trading firms that had proliferated on Wall Street. This unlikely Canadian from a small Wall Street firm (RBC) ends up becoming the expert. The high-frequency trading firms had exploited technology to shave just a few milliseconds off of the time of a transaction, making them the front-runners in the world of electronic trading.  No-one knew that they were doing this or how they were achieving this until Brad uncovered the truth.

Modern day front-runners had been, and still are compressing timeframes by a few milliseconds and this gives then a huge and illegal business advantage. Instead of shortening a business process, the high frequency traders used the time savings to short-circuit the trading process and create an advantage for themselves. These high frequency traders are using the same principal of shortening processing time, by milliseconds, to get an unfair advantage in an open market.

Brad Katsuyama, the Canadian RBC trader, took on an industry and exposed it when most people in the industry didn’t even know what was going on. Even as he shined a light on these practices he was ridiculed because it is almost impossible to prove that front-running was occuring. Lewis writes, “Brad Katsuyama explained to the world what he and his team learned about the inner workings of the stock market. The nation of investors was appalled – a poll of institutional investors in late April 2014, conducted by the brokerage firm ConvergEx, discovered that 70 percent of them thought that the U.S. stock market was unfair and 51 percent considered high-frequency trading “harmful or very harmful”. And the complaining investors were the big guys, the mutual funds and pension funds and hedge funds you might think could defend themselves in the market.”

“The narrow slice of the financial sector [high-frequency traders and the exchanges that support this practice] that makes money off the situation that this book [Flash Boys] describes felt the need to shape the public perception of it. … Then came the unfortunate episode on CNBC, during which Brad Katsuyama was verbally assaulted by the president of the BATS exchange. … He [the BATS President] hollered and ranted and waved and in general made such a spectacle of himself that half of Wall Street came to a halt, transfixed. … I was told by an CNBC producer that it was the most watched segment in CNBC’s history … His defining moment came when Katsuyama asked him a simple question: Did BATS sell a faster picture of the stock market to high-frequency traders, while using a slower picture to price the trades of investors? … The BATS president said no … It wasn’t true … Four months later, BATS parted ways with its president.”

If you are interested, here is a 4-minute compilation of the highlights of the CNBC segment.

If you want to watch the whole 20+ minute segment, here is the link.

I don’t think I have played spoiler by writing this blog.  The unfolding of the Flash Boys story is fascinating and Lewis is at his best.  I have to say that I felt a little patriotic reading about the Canadian, Brad Katsuyama, playing such a pivotal role in one of America’s biggest business stages.

Compressed Timelines – Business Processes Sped Up

Applying communication tools to compress timelines can give you huge advantages in your business.  But anything in the wrong hands can be used in illegal ways as well.  Brad ended up with a very creative approach to level the playing field, which ultimately involves an unlikely twist involving Goldman Sacks.

I hope you get a chance to enjoy the book!

Les Millisecondes font la Différence

Les avantages des traders

Un des thèmes sur lequel j’ai quelque peu écrit sont les énormes avantages qui sont dégagés grâce aux cycles économiques, ou la réduction des délais. En réalité les plus importantes possibilités de retour sur investissement pour les entreprises se trouvent probablement dans la capacité à réduire le temps nécessaire pour faire avancer les choses. Mais, réduire le temps des transactions de millisecondes peut-il faire une différence?

Les Millisecondes font toute la différence pour les Trader de Stock

41rC-xFW03L._SY344_BO1,204,203,200_J’ai récemment lu le livre “Flash Boys” de Michael Lewis, le même auteur à succès qui a écrit, “Moneyball”. “Flash Boys” fournit une vue du monde du trading en ligne, de l’intérieur.

Beaucoup de gens ont acheté et vendu des actions en utilisant un compte de placement en ligne – certaines personnes sont des investisseurs et certains sont des traders. La différence se résume à la durée de détention des actions. Si vous en achetez et en vendez dans la même journée alors vous êtes un Trader de Jour. Si vous les gardez la durée nécessaire pour l’appréciation du stock, alors vous êtes un Investisseur à Long Terme. Ces deux termes (Trader de Jour et Investisseur à Long Terme) définissent les deux extrêmes de la chronologie sur lesquels les investissements sont maintenus.

Peu importe où un acheteur de stock se trouve sur l’échelle, il finira par cliquer sur “Acheter” sur son compte. “Après quoi ? Il peut penser qu’il sait ce qui va se passer après avoir cliqué sur la touche de son clavier, mais croyez-moi, il ne le sait pas. Si c’était le cas, il aurait réfléchi à deux fois avant d’appuyer dessus”, explique Lewis.

Lewis transporte alors le lecteur dans un roman de “cape et d’épée”, mais à travers de la vie réelle des personnages de Wall Street et leurs histoires. Je ne pouvais pas m’arrêter de lire ce livre, et ce, même en ayant un grand intérêt pour la technologie et l’investissement, l’histoire a été très captivante.

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Front running – La Technologie a pris le dessus

La définition du Front-running selon Wikipédia, est “le fait de pratiquer illégalement l’activité de courtier en valeurs mobilières, et d’exécuter des ordres sur un titre, pour son propre compte, tout en profitant de l’attente des commandes de ses clients.”

Le Front-running a débuté lorsque la négociation des stocks a commencé il y a de cela des centaines d’années. Mais comme la technologie de gestion des stocks a changé, le front running a aussi dû changer. Lorsque la négociation d’actions a été automatisée, les gens ont cru que la possibilité d’exécuter du stock avait disparu. C’est ce que le grand public et Wall Street pensaient, mais quelque chose ne semble pas juste selon Brad Katsuyama, un trader RBC qui avait déménagé de son bureau de Toronto à celui de New York.

“Flash Boys” se résume à l’histoire de Brad. Dans sa recherche, il explique ce qui ne pouvait pas être expliqué. Au fur et à mesure que Brad découvre la vérité avec une équipe de collègues improbables, il ne s’instruit pas seulement mais fini par exposer le travail du trading de firme à haute fréquence, qui a proliféré à Wall Street.

Cet improbable Canadien venant d’une petite firme de Wall Street (RBC) finit par devenir l’Expert. Les sociétés de négoce à haute fréquence avaient exploité une technologie qui est, d’éliminer quelques millisecondes hors du temps d’une transaction, faisant d’eux les avant-coureurs du le monde du commerce électronique. Personne ne savait ce qu’ils faisaient ou comment ils le faisaient, et ce, jusqu’à ce que Brad découvre la vérité.

Les avant-coureurs des jours modernes avaient été, et sont encore, pressés par des délais de quelques millisecondes, donnant ainsi un avantage commercial énorme et illégal. Au lieu de raccourcir un processus d’affaires, les traders de haute fréquence utilisaient les économies de temps pour court-circuiter le processus de négociation et ainsi se créer un avantage. Les traders à haute fréquence utilisent le même principe, celui de raccourcir le temps de traitement par millisecondes pour obtenir un avantage déloyal dans un marché ouvert.

Brad Katsuyama, le trader canadien de RBC s’est attaqué à une industrie et l’a exposé, alors que la plupart des gens de l’industrie ne savaient même pas ce qui se passait. Même s’il a mis en lumières ces pratiques, il a été ridiculisé parce qu’il était pratiquement impossible de prouver que l’avant-course se produisait. Lewis écrit: «Brad Katsuyama a expliqué au monde ce que lui et son équipe avaient appris des rouages du marché boursier. Les investisseurs de la nation ont été consternés – un sondage réalisé auprès d’investisseurs institutionnels à la fin Avril 2014, menée par le cabinet de courtage ConvergEx a découvert que 70 pour cent (70%) d’entre eux pensaient que le marché boursier américain était injuste et 51 pour cent (51%) considéraient le trading haute fréquence comme étant «dangereux ou très nocif ». Les investisseurs qui se plaignent étaient des gros joueurs, vous pouvez être amené à penser que les fonds communs de placement, les fonds de pension et les fonds de couverture pouvaient se défendre sur le marché “.

“L’étroite part du secteur financier [traders haute fréquence et les échanges qui soutiennent cette pratique] qui fait de l’argent avec la situation décrite dans ce livre [Flash Boys] explique le besoin de façonner la perception du public à cet égard. … Puis vint le malheureux épisode sur CNBC au cours duquel Brad Katsuyama a été agressé verbalement par le Président de la Bourse de BATS. … Il [le Président de BATS] cria, tempêta et s’agita de manière ridicule à tel point que la moitié de Wall Street s’est arrêté. … Un producteur CNBC m’a dit que ça a été le segment le plus regardé de l’histoire de CNBC … Son moment décisif est venu lorsque Katsuyama lui a posé une simple question: Est-ce que BATS vend une image plus rapide du marché boursier pour les traders haute fréquence, tout en utilisant une image plus lente pour faire augmenter les prix des échanges des investisseurs? … Le Président de BATS a dit non … Ce n’était pas vrai … Quatre mois plus tard, BATS se séparait de son Président “.

Si vous êtes intéressés, voici une compilation de 4 minutes des moments clés du segment CNBC.

Si vous voulez regarder le segment de 20 minutes dans toute son intégralité, voici le lien.

Je ne pense pas vous avoir gâché la lecture du livre en écrivant ce blog. Le déroulement de l’histoire de “Flash Boys” est fascinant et Lewis est à son meilleur. Je dois dire que je me suis senti un peu patriotique à la lecture du livre de ce Canadien, Brad Katsuyama, jouant un rôle central dans l’un des plus importants moments d’affaires de l’Amérique.

Échéancier comprimé – Processus de Travail Accéléré

L’application des outils de communication pour comprimer les délais peuvent vous donner d’importants avantages dans votre entreprise. Mais rien ne peut être utilisé efficacement une fois dans les mains de la mauvaise personne ou en faisant quelque chose d’illégal. Brad a fini par choisir une approche très créative pour niveler le terrain de jeu, elle implique une tournure peu probable impliquant Goldman Sacks.

J’espère vous aurez la chance de profiter du livre!

The Difference Between a Virtual Audio Call and a Virtual Video Call?

Anyone who has been a part of an audio conference call will understand some of the shortcomings that come along with it. How can we eliminate or mitigate these shortcomings and provide a richer communications experience?

Do Collaboration Technologies lead to loneliness and isolation?

The author of “The Innovation of Loneliness” explains “Loneliness has become the most common ailment of the modern world.” And what is the root cause of this loneliness? Our addiction to technology. Let’s consider which collaboration technologies can lead to loneliness and isolation and what technology allows us to build the best relationships.

Is True Collaboration a 2 Pizza Team Rule?

Jeff Bezos, Thomas Edison and Mark Zuckerburg have all had a common observation – smaller teams accomplish more. Far more, when it comes to creative or innovative work. So, what technology can turbo charge these smaller teams to be creative and innovative?

What Type of Space Do You Need?

Meeting rooms are where workspace and technology really come together. Room systems must be effective places to meet where both the physical and virtual world intersect seamlessly. They must contain the right mix of conferencing technologies to enable the required level of collaboration and this will naturally lead to innovation.

Are You Operating in the VoiceCon or Enterprise Connect World?

In the past the communications industry focused solely on the element of voice. Today in the Enterprise Connect world communications technologies must easily connect and incorporate many more elements than voice only. Being stuck in the VoiceCon world can pose problems for companies who are trying to be innovators and be industry leaders. Learn what key indicators separate organizations in the VoiceCon World and Enterprise Connect.

Increasing the Velocity of Collaboration in Your Organization

Once the user based, collaboration capability requirements are determined, then you can select what the technologies are for the meeting rooms and for the individuals connecting into conferences. This process is critical and avoids a lot of wasted efforts and brings a cohesive approach to the technology roadmap your organization requires. It helps turn the patchwork of technology found in most organizations into a tapestry of technology, which becomes an enabler to greater collaboration within the organization.

Are you having a hard time selling collaboration in your organization?

CollaborationSuccessful organizations, big and small, are successful because of their ability to collaborate. Organizations that collaborate make more money. Collaboration is the predecessor to innovation and innovative companies win in today’s competitive landscape. Whether a company has two employees or 20,000, improved collaboration represents your best opportunity to tap the full talents of your people, move with greater speed and flexibility and compete to win over the next decade.

Then why is “selling” a collaboration strategy internally so darn hard?

Collaboration = culture + process + technology

You can’t achieve collaboration without all three working together and often it’s hard to demonstrate to an organization that perhaps their culture or their process is not conducive to an effective collaboration strategy. This is a hard sell. Technology can always be bought or retrofitted. It’s the first two, culture and process, that can grind an organization to a halt when determining the right collaboration solution path.

Here are three of the biggest challenges we see every day in pitching collaboration solutions to a team or organization:

1. People often don’t understand the meaning of Collaboration.

Collaboration is often misunderstood. Collaboration is an intangible tool for extracting knowledge, resources and ideas of anyone and everyone inside and outside an organization. Collaboration should be used to tap into your pool of talent and use the ideas and resources that will make your organization fit for a market that is changing at Mach speed.

Idea: Kick start your collaboration strategy by gaining a common interpretation of collaboration within your organization. Allowing people to phone in for a meeting is not collaboration but applying an interactive whiteboard session to your next planning session is a step that people can embrace.

2. People can’t track and measure collaboration output or define metrics.

The ROI on Collaboration can be defined by three specific measures: Operational measures, Productivity measures and Strategic Measures. An operational measure includes decreasing traveling costs and decreasing costs associated with office space. Collaboration can be measured by an increase in Productivity such as improved decision making cycles and efficient project completion. Strategic measures are harder to quantify but they include enhancing customer satisfaction and loyalty. If the benefits of collaboration are properly measured a huge ROI can be realized.

3. People don’t know how to build or execute a Collaboration strategy.

Many ­­organizations embrace the idea of collaboration but often struggle to define the steps and actions to make it happen. They often lack a guide or thought leader with respect to how they should approach their collaboration strategy. Collaboration technology is often implemented without strategy and organizations never reap the benefits or ROI.

Idea: Create a Collaboration Roadmap using strategic planning methodologies. Many people jump into purchasing equipment before they think through a strategy. This is because it is easier to pitch a capital expense then tackle culture and process. Before investing in collaboration technology, map the needs and capabilities of the organization and assess the people receiving your messages.

Being more collaborative means knowing your weaknesses, openly communicating, being authentic to yourself and knowing your position on a team. To adopt a collaborative culture in an organization it must encourage authenticity, open and frequent communication, team based work, communication technology that is all interconnected and clear visions.

Free eBook to Get You Started…

If you have experienced one or all three these issues while trying to pitch collaboration to your organization, download this free guide: 47 Collaboration Quotes. We created this guide to help people use the quotes to sell collaboration within your organization and help you address these obstacles.

Why the Old Office Cubicle Just Doesn’t Cut it Anymore

Increasingly, organizations are asking ET Group about the importance of designing office space solutions that incorporates both the workspace and technology connection requirements of workers to accommodate personal and group meeting spaces in a variety of situations. More and more organizations are commenting that the old office cubicle farms just don’t cut it anymore. People need to be freed up to be able to work as easily in the cafeteria, a formal meeting space or their personal work space.

The ET Group and partner Mayhew & Associates, had the opportunity to demonstrate this new reality recently when we participated in Cisco’s annual customer eventand showcase at the Toronto Congress Centre on May 16, 2012.  The Toronto event is the largest of the Cisco Plus Canada Roadshow and attracted over 2000 technical and business decision-makers and influencers along with Cisco channel partners.

ET Group and Mayhew featured a booth in the Technology Showcase which combined purpose built, technology-enabled furniture along with video conferencing and white-boarding technology to simulate today’s office collaboration enhancing environments.

Why cubicles just don’t cut it.

  1. Furniture needs to be practical & functional for formal meetings as well as inviting and comfortable for impromptu gatherings.
  2. Space needs to be technology enabled to integrate naturally and quickly with technology solutions that connect users to their device of choice and then to connect over the internet with other workers wherever they are…seamlessly and quickly as a natural extension of the workers collaboration toolset.
  3. Collaboration technologies integrated into the space design and furniture need to provide an active workspace that immediately enables users to access their information, share it easily and robustly with others, whether they share the physical space or are connected virtually.

The resulting conversations of visitors at the show included concerns about the old style cube farms. People were enlightened to see that there are options out there for organizations who want to use space, furniture and technology to enhance the collaboration and productivity of the workforce.

One CEO at the show concurred with the negative impact of the “cube farm” and noted his particular challenge as a government funded organization, is that he can’t provide financial incentives to his staff, so providing an environment that is unique and the opposite of cubicle drudgery is what will attract and retain employees.

Other attendees noted that when you have the responsibility for representing many offices nationally, the need for creating collaborative environments cannot simply be addressed by adding technology or by re-configuring the office cubicle. Many companies struggle to understand the future of workspace in a holistic way.

Closing  thoughts on cubicle farms…

Collaborative_Work_EnvironmentsMany companies think that moving past the cube farm is expensive, time consuming and disruptive to their business but they are not seeing the big picture. Employees are not only asking for integrated design space, furniture and technology, but it is a key driver of change management strategies required to assist people in their transition to working in different, collaborative ways. Companies need to invest beyond the cube farm and provide integrated workspaces that allow all types of workers to connect and enjoy their work environments.

The world is rapidly changing  and we have to adapt just as quickly. Our customers are looking for leadership in helping them think about and design the collaboration ecosystems that will take them successfully into the future.Unfortunately, or fortunately, the traditional office cubicle, will likely only be found in a museum.