Time Is Money, and GPS Spoofing Can Cost It
NEW YORK ( TheStreet) -- I always knew I could lose my shirt on Wall Street, but I never thought I'd have to worry about my watch.
Not the Rolex, but the actual seconds marking the passage of time. It turns out the sands of the hourglass that tell us when things such as stocks and bonds get traded can be stolen.
|Fool the trading clock and bad things happen. While it's unlikely damage has yet been done by time thieves, there's significant potential for trouble.|
Don't believe me? I've spent real time with the man who may have snapped time's Master Lock : Todd Humphreys , a professor of aerospace engineering and engineering mechanics at the University of Texas at Austin.
Humphreys says it's unlikely any damage has yet been done by time thieves, but he has developed a potential temporal bash-and-crash tool called a global positioning system spoofer . The device sends out false signals that can fool the global-positioning-based timing tools markets such as the New York Stock Exchange use to determine when trades happen.
Fool the trading clock and bad things happen.
Spoofed trade timing mechanisms can fall out of sync with the rest of the trading network and potentially wreak havoc in today's ADD, high-frequency-trading financial universe.
"Price doesn't matter unless you have a time attached to it," Humphreys told me. "Because in the end you want to be able to compare prices at different times and from different exchanges."
Trading gets small
The price of a deal depends on when it gets done. The faster deals close, the thinner the slice of time needed to accurately price the transaction. Trading intervals of thousandths, millionths and, yes, even billionths of a second are now commonly measured.
And unknown to many, these tiny fractions of a second are sliced by using readily available global positioning technologies. Who knew, but the GPS tools that tell your iPhone and Droid where the nearest lattes are are the same ones markets use to track the time trades close.
"Though we do a lot with the time signals we get from the GPS system, that is the basis for much of the time-stamping we do," says Andrew Bach, senior vice president and global head of network services for the NYSE.
Big traders are GPS Time-savvy.
Here's the scary part: Humphreys says the right person with the right tools can fool these GPS-based time systems. There are really two GPS networks: an encrypted signal used by the U.S. military and a public one available to everyone, including trading markets.
Humphreys says sophisticated actors using spoofing technology on this unencrypted GPS system might blind an exchange's clocks. But he states firmly that the disaster scenarios -- a Dr. Financial Evil holding markets hostage -- are unlikely. Nobody knows how markets will react in a forced GPS outage, so designing a profitable strategy is slippery. Spoofing requires technical sophistication and patience.