Fidessa: Not all tails wag the dog | Financial Industry & Algorithmic Trading News

Christian Voigt, Fidessa

Christian Voigt, Fidessa

Modern atomic clocks tick along much more consistently than the
earth manages to rotate around its own axis, which varies due to
climatic and geological events. Thus, every so often the global
masters of time insert a leap-second in order to align atomic
clocks and earth rotation.

Unlike changes in winter/summer-time, humans don’t really notice
it. Even most software applications don’t care about it. However,
trading platforms do care, because unique timestamps and sequence
of events are highly important for them.

Within the financial industry there is no common approach on how
to deal with the extra second and its implications. Many firms
will use some flavour of a tactic, where the clock is
deliberately speeded up over a certain period, to smooth the
transition and not trip up connected systems. While this approach
proved successful in the past, it raises concerns in the future,
because under MiFID II RTS 25, firms are given very tight
boundaries when it comes to business clock synchronisation. It is
safe to assume that during those adjustment periods business
clocks will deviate from the master clocks by more than the
mandated limits.

But as not all tails wag the dog, the earth will continue to
tumble through time and space, and it will not rotate more
steadily because of MiFID II. Instead, humans might have to
accept that sometimes their highly precise technology and rules
are off the mark, ever so slightly.

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