Sunday, January 30, 2011

Wall Street 2 Money Never Sleeps 3

The ultimate nightmare?  Imagine someone being able to hack into the computers that perform the high frequency trading in the different stock exchanges?  Would they be able to destroy the economy of countries in minutes?

Are these banks of servers controlling our buying and selling of stocks safe from outside control or attacks?  Some do not think so and this should make us ALL pause and consider the issue very carefully.

According to an article in infoworld there is a way to influence these high frequency computers.  They would influence them by actually slowing them up.  Bill Snyder explains:
High-frequency trading networks, which complete stock market transactions in microseconds, are vulnerable to manipulation by hackers who can inject tiny amounts of latency into them. By doing so, they can subtly change the course of trading and pocket profits of millions of dollars in just a few seconds, says Rony Kay, a former IBM research fellow and founder of cPacket Networks, a Silicon Valley firm that develops chips and technologies for network monitoring and traffic analysis.
The sensor mechanisms that monitor these high frequency networks have a sensitivity only down to the milliseconds but not microseconds.  These so called "side-channel" attacks can create tiny delays in the transmission of market data and trades.  This could give the attacker an unfair trading advantage.   These attacks would be for all practical purposes be invisible to sensors.  Rony Kay CEO of cPacket Networks, has developed hardware that can track these delays in a high speed network.  This hardware was developed for other security purposes but equally applies to financial networks.  The key is to avoid delays in a financial network.  These delays are called latencies.  There are several reasons why networks can have delays.  Here is a crash course by Jim Theodora which is pretty thorough.  If you really want to know what makes a network slow then watch this.  If you cannot see the embedded video here is the link:

The thing no one has spoken about is if there is a way for a hacker to circumvent the off switch for malicious purposes.  If this could be done, then world economies could be badly damaged in 15 minutes.  Of course an EMP bomb would do all these networks in by destroying the electrical grid and frying all the electronic circuits.  But we are speaking of more subtle attack on the networks themselves.  Perhaps we will investigate this for a future article.

No comments: