Monday, June 07, 2004


Trading Floors

The New York Times opined yesterday on the recently surfaced Enron tapes. The Times commented on the traders' vocabulary, which I found hilarious. Having spent much time on trading floors at Large Broker-Dealers and Large Investment Banks, there's nothing on those tapes I haven't heard before. Trading floors are very wild and wooly places loaded with volatile folk who have to make split-second decisions (literally - a Large Information Provider told me recently that the average number of market ticks ranges anywhere from 25K to 40K per second and seeing 100K ticks per second is very foreseeable in the near future. Very good for program trading, not so good for long-term prospects for human traders). I don't particularly see the relevance of the traders' vocabularies, since apparently they don't use such language where the Times editorial writers reside on the Upper West Side. Cynical bastards, most assuredly. But rather than focus on the symptom, perhaps do something useful. Turn William Safire loose on the tapes, and get his surely interesting take on the action.

Funny enough, even Safire gets stumped on occasion:
He (referring to William F. Buckley)'s made those of us in the word trade stretch. "There is pleasure in even a little progress," he said in tribute to the conservative thinker James Burnham, "even among those of us taught, at our mother's knee, not to seek to immanentize the eschaton."

Eschatology is the study of ultimate destiny, the purpose of life reckoned at the last accounting. The eschaton is its Greek root: the last thing, the divinely ordained climax of history, with its present sense of a final judgment that should inform our lives. That's the easy part.

But immanentize? The Latin immanere, "to remain in," leads us to immanent, "inherent, intrinsic," with a special philosophical sense of "confined to the mind." It's not a word I would use, because inherent does the job and immanent is too easily confused with imminent, "about to take place," with a connotation of danger.

So I admitted defeat and called Buckley.

"The source of immanentize the eschaton is the 1952 New Science of Politics, by Eric Voegelin," he explained. "It's a warning against taking ultimate reality and treating it pantheistically, rather than as an objective philosophical phenomenon." The conservative pioneer added: "It was turned into a bumper sticker by the Young Americans for Freedom. Delicious, don't you think?"

Oh yeah, all copyrights in the above indented text belong to their respective holders, and I'm only quoting for informational purposes.

One thing about trading floors is that these guys are operating under monstrous exposure. A conservative estimate of downtime for a trading floor is $6M/hour, and if they miss deadlines, such as the FedWire closing, they've got some pretty heavy regulatory risk coming at them. Having been on most of them in my neck of the woods, I understand the culture pretty well, and was entirely unshocked by what I read. Liar's Poker is a great introduction to the culture on the floors, but until you've actually built one and gotten them running, you never quite understand. Traders like to reach out and grab their support staff by the neck, which beautifully contradicts the centralized support model where a help desk in Ohio (or Bangalore for that matter) will look at a problem and eventually a technician will fix it. Even with a Sev 1 (meaning the organization is losing money like a bandit), remote support for these things doesn't work all that well, and the poor Level 1 guy taking the call and entering the ticket into Remedy might not have a clue what Bloomberg is.

I well remember a honcho in a Large Investment Bank screaming "Why the fuck am I paying Park Avenue rents for IT people?". It would've been pointless to remind him that if they were in Jersey City, for example, and someone needed to reach out and touch something (reboot a router or CSU/DSU for example) that resource would've spent the better part of an hour, if not longer, getting to Park Avenue to flip a switch. There's your six million bucks, and who knows what if it was at the end of the day and you couldn't meet the Fed closing.

Lots of ammo here. Needs to be dispensed wisely.


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