The Wall Street Code

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The Wall Street Code

Super quick computers and advanced mathematical formulas have largely taken over trading on the financial markets from human beings - algorithms which seem to have a life of their own. Algorithms secretly lie waiting for the moment that your Apple share or your pension money gets on the market. The only ones who understand the system in any way are its architects, the algorithm developers. Haim Bodek is one such algo-developer.

After finding some strange wrongdoings he set out on a personal crusade against this elusive system. Welcome to the twisted nooks and crannies of our financial markets. The machinery behind our financial markets, consisting of mathematical models, data centers and miles and miles of fiber optic cables, is disguised by technological complexity and secrecy. The builders of this financial system are a new breed of Wall Street employees - quants - mathematicians and physicists who are responsible for a technological revolution.

Haim Bodek is a quant; he specialized in artificial intelligence and worked for Goldman Sachs. He knows the system from the inside, he helped build it. In 2011 Bodek's high-frequency trading company "Trading Machines" went under. According to Bodek the reason was a wrong order type, or the way in which he told the exchange to execute his order. Haim Bodek was invited to tell his story at the "Battle of the Quants" - a recurring event where quants discuss high-frequency trading, amongst other things.

Bodek wrote an algorithm for trading machines that would generate guaranteed income - a money machine that weathered the financial meltdown of 2008. But then from one day to the next the algorithm stopped working. Bodek thought he understood the automated financial markets, but with the help of the social codes within the high-frequency trading world certain traders had found a way to have their orders jump the queue. Our search for the origins of the technological revolution, that has taken place in financial markets over the past few decades, leads us to an even greater trading legend.

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Ratings: 9.23/10 from 262 users.
  • Michael Jay Burns

    If we are to take a lesson on the basic nature of our species from the examples provided in this film it is that the higher one rises above the crowd the more god-like one's self-image becomes. Morality is not part of the zeitgeist of the ultra rich. One can only wonder when the mob will once again storm the castles and teach their occupants the lesson of the guillotine.

  • Paul Gloor

    Power corrupts, absolute power corrupts absolutely...

  • Michael Jay Burns

    True enough, but the trait is more universal I think. The concept of The Elect in Christianity is an example. It is not that the Nazi's were so inhuman it is that humans are never that far from being Nazi's.

  • AW

    why would you draw any lessons from a bunch of lowlife cheaters who front run markets, these people are essentially autistic and would struggle to carry out any kind of productive labor, that didn't involve tricky arcane computer language that exploits the fact their systems are built with premier access and deference from a bunch of other equally corrupt financiers who all dined out on cash from pensions funds.

    the whole thing is disgustingly rotten.

    here's a useful lesson though; all this bullsh*t front running translates to inflation. which means your money won't buy the same amount of goods and services it did last month. Consider also that they are now doing it on an industrial scale. Rod for their own back comes to mind. OR perhaps more accurately their rod for our back.

  • henrymart81

    this guy is my hero except he seems to suck at what he does

  • deanharrington

    The documentary 'Wall Street Code' is an exceptional documentary that leaves us hamsters on our daily treadmills to pay the rent realize we are out of the equation! There is certainly something wrong with Wall Street. The FCC does not move … is it lack of brains, fear of what the real insiders will do to them individually or general malaise ???

  • dmxi

    very disturbing.....!

  • far out

    Any coders and day traders out there?

    Whats with listing everyones languages?!?!

    I day trade and the more HF/Automated systems are out there the more money for me!!!!

    People think the market is getting more complicated and humans will no longer be able to keep up. In fact whats happening is that the market is becoming more predictable!

    People and crowds make irrational and unpredictable decisions while automated systems dont. Think about. If all market volume/trades in the market are automated then it will follow a preditable pattern!

  • AW

    until some big hedge fund dumps a few million shares on the market knowing full well that all the algos's will shi*t the preverbial and sell everything...and thus you return to the wilderness of mirrors.

  • Guest

    "Look Mom&Dad! See how smart&strong I am!"

  • far out

    that was the 2008 "crash"... it was a nice time to make money going down and then up again!

  • far out

    I guess you are not a coder or day trader?

  • hpthoroughbreds

    coming from a blue collar background originally. i saw what happened to my parent's "retirement funds". and i shuddered when these guys talked about pension funds being bottom feeders and the many tiered ways the predators just ruined the lives of so many millions of hard working people depending on those pensions when they retired after 35 or 40 years of work. take a drive on state route 2 along the Ohio river from Marietta north-east. hope you guys are proud of the desolation and poverty you created through greed. only one very small slice of working American's reality today. hey, far out, why not take a little trip?

  • hpthoroughbreds

    i hope you get a moment to look at my post, above.

  • hpthoroughbreds

    that mr. burns is so very true i actually just got goose bumps.

  • Michael Jay Burns

    The challenge, I suggest, is to resist the temptation to moralize and accept this part of our nature as something that simply must be dealt with. Like it or not the only possible counter-balance to the abuses of personal wealth is government. Possibly the recent election in the NYC mayor's race indicates the beginning of a trend toward a government "by the people" rather than one bought by the few.

  • far out

    you want to see real poverty you should go see Africa!

  • TheDanishViking

    Very interesting docu. The bankers make a lot of money, and they probably will continue to do so. But at least today most people realize that it all comes down to a simple scam. Fewer and fewer people believe the glorofying self-image that the "Masters of the Universe" are so eager to maintain. At the end of the day these guys are just street-corner hustlers. I guess the only comfort we have is that at least today it is out in the open that being a wall-street banker is one of the most useless and unconstructive things you can do with your life.

  • Michael Jay Burns

    Same thieves, different tools. IMF and World Bank are Big Money's poverty generators there.

  • Michael Jay Burns

    Do you remember Long-Term Capital Portfolio L.P.,
    Myron S. Scholes, Robert C. Merton?
    Odds are you and the rest of the little fish in your school will swim the same route to extinction. You won't be big enough to be in the Fed inner circle on harvest day and you will be wiped out.
    Nobody in America will shed a tear for dead piranhas.

  • BERNARD FRUGIER

    The lesson of the guillotine? That will never happen in the US where individualism and pursuit of personal happiness are all that matter.
    Close to 50 millions americans live in poverty... ground for a revolution? No, the rest of them look the other way...
    "One for oneself and God for me" that's what America is all about today. Survival of the fittest.

  • Michael Jay Burns

    What happens when/if a super majority comes to the conclusion that what is best for them is the destruction of their oppressors?
    Also, "the lesson of the guillotine" can be taken figuratively, e.g a political beheading by a populist political movement.
    I'm sure you have noted the results in the NYC mayoral contest.

  • Deborah Stone

    Yes - but African nations aren't under any misconceptions about their system......Americans are living in Disneyland.

  • LoggerheadShrike

    Why bother when people like you will ensure it comes to us?

  • awful_truth

    An excellent documentary that not only gives insight into the world of the stock exchange, but epitomizes the true nature of all human endeavors. (everything is rigged) So, the next time you want to invest money, or have concern regarding your pension plan, just remember that we are all bottom feeders supporting the select few. I advise everyone to check out this documentary. (5 stars)

  • BlackDeath

    Coder & ex Reuters IT tech (Lipper, European HQ). I can only rub my hands with glee in knowing that, eventually, you will bet it all on that 'preditable' pattern. Go on...feed your face...

  • ChicagoRevo Godzilla

    Neither are you! So do us a favor and stop talking s**t you don't know about Pendejo!

  • Liz

    Spot on Deborah. I have a friend who emigrated from Russia to the USA for a better life. Now, all he has to live for is the american illusion. When he lived in Russia, he may not have agreed with their policies but at least he knew what they were.

  • Deborah Stone

    IMF has wreaked havoc on many 3rd world countries economies. The system of greed keeps giving.

  • Deborah Stone

    Perhaps this is true about America, but in what other country do you think you can have a better life and more personal freedom? I have done quite a bit of traveling and so far, I'm not packing my bags.

  • Rough McHewn

    Bring on the Tobin Tax!

  • awful_truth

    @BlackDeath: Actually, I did not receive your response on my dashboard. (explains my delayed response) So, I checked out the link to the video you provided, interesting video.
    Weirdly, for as much as I rail against global slavery, I do embrace the variety and creativity the world has to offer. Although It is the exploitation of inequity that concerns me primarily, the superficial quality that accompanies 'success' is also most disturbing. (Justin Bieber, Brittany Spears, etc)
    To me, the selling of one's soul is giving up genuine intent, the true character of the individual, all for a buck. Their loss of direction is a true failure, regardless of how much money they make, and justifies my position of contempt for the greed that is truly running the world.

  • awful_truth

    @Chris Cartmill. I have not seen the items you have listed as of yet. I will check out your links the first chance I get, and will get back to you. Take care, and best wishes Chris!

  • awful_truth

    @Chris Cartmill: I checked out the links you provided, and it looks very informative. Some of the information can definitely be found on other documentaries, some of which are located on this website. Either way, I may have to purchase it just because it supports real education for the layman. Thanks for the heads up Chris!

  • brimp

    A suggestion: go long on gold and guillotines. When the music stops we'll need both.

  • Justin_Khase

    Interesting observation.

  • twofire

    One main thing i get from this documentary is that Haim Bodek didn't do his homework on the order sessions available and let his firm bleed money over an extended period of time. First of all, the order sessions are available to anyone. Secondly, if your firm was bleeding cash over an extended period of time, why didn't you stop and look in more detail into what was going wrong? Seems s*upid to just keep on trading and bankrupting the firm! WTH

  • Joe Blow

    Good documentary, but like Flashboys lacked the context. What they're essentially arguing against is the presence of is digital market makers. 30 years ago commissions + spreads (the average amount a market maker would make) were much higher. Today HFT has taken the place of the floor market makers, they make less per trade, but there is a lot more volume.

    When you boil it down it's really as simple as people being mad that floor market makers actually took more risk when they provided market liquidity to larger orders. Today HFT takes next to zero risk on the transaction (instead their risk in the massive sums spent on improving financial infrastructure), but in my book that shouldn't matter because on average HFT is taking less as a market maker than the old floor guys did collectively off each transaction.

    The other thing is that there was a short period of time where HFT market making was really liberalized and anybody with the technical capability could make a market. But then co-location, dedicated microwave towers, granting of different order types, etc. brought back the favoritism in market making (that has long existed) to institutions with deeper pockets and more overall volume.

    The last thing is that dedicated/preferential market makers (or preferential market intermediaries) probably doesn't need to happen any more as a practice. One could argue they no longer serve a purpose and that the market is basically in the process of weeding them out (which isn't something that will happen over night, but is happening).