Tag Archives: India

“The Sexiest Girl in the Class”

While US and European politicians talk about how to curb it, trading based on algorithms is not going away. In fact, it is spreading faster than ever, as emerging markets like Brazil, India , Russia and China, are now catching on to its potential. Ordinary traders are being replaced by coordinators of algorithms. But that’s just half the story.

“If you have the fastest network, you’re the sexiest girl in the class, you’re the top boy. It’s as simple as that.”

Fraser Bell

As pointed out in earlier post; there is a very clear parallel here to what happened between 2000 and 2005 with the rapid build-up of the more or less unknown market of financial derivatives. Only this time it’s more technical…

In the financial centres of Europe and the US, where the practice began, the people responsible for policing the markets are getting worried about their ability to cope.

But while they talk about how to curb it, trading based on algorithms is not going away. In fact, it is spreading faster than ever, as emerging markets catch on to its potential, BBC News reports.

“The Bric (Brazil, Russia, India and China) countries are where it’s at right now,” says Dr John Bates, executive vice-president and chief technology officer of Progress Software, a company that has pioneered new techniques in what are known as quantitative trading programs.

“We’ve seen it grow very quickly in Brazil. It’s done what happened in London and New York much more quickly. Now we’re seeing the same trend in India and China and even, embryonically, in Russia.”

According to Dr Bates, in the past two to three years, Brazil has already run through a cycle of development that took far longer in London and New York, with algorithm-based trading now available in equities, futures and foreign exchange markets.

Brazil’s Bovespa stock exchange has invested in new technology, boosting the proportion of algorithm-based equity trades from 4% to 12% in the past year.

“The adaptation is faster and they can leapfrog the mistakes that have been made in other places,” he says.

Dr Bates says India is already following suit and will see even more automated trade in the next few years: “The market’s gone very electronic there.”

Indian analysts reckon that as many as a quarter of all trades in the country now involve algorithms, still mainly in equities, whereas up to half of all transactions in Europe and nearly two-thirds of US transactions are estimated to come from high-frequency and algorithmic trading.

Taxing, Limits and Supervision

France is the first of the worlds major economies to impose special taxes on High-frequency Trading (HFT).

And according to head of France’s AMF watchdog, Jean-Pierre Jouyet, the French are also considering speed limits and some kind of supervision.

As Dr. Bates told the Asian Financial Forum in Hong Kong in January:

“As there is a rush towards reducing transaction time in the name of high-frequency trading, the question we need to ask is what purpose are we serving by reducing trading time to eight microseconds or even two microseconds. Is this justified?”.

Well, I guess that depends on who you ask?

The Sexiest Girl

It is kinda obvious that the financial industry would not be upgrading its technology by 90 billion dollar this year  if they didn’t think it was worth it.

“If you have the fastest network, you’re the sexiest girl in the class, you’re the top boy,” says Fraser Bell, managing director of BSO Network Solutions. “It’s as simple as that.”

BSO operates its own international network covering the UK, the US and 16 other countries, including the main European financial markets, Hong Kong, Singapore, Brazil and Russia.

It prides itself on being able to send data from London to Hong Kong and back in just 174 milliseconds.

“There’s a massive global drive for speed,” says Mr Bell, who sees himself as locked in a “race to zero” with rival network operators.

Read the full article at BBC News here.

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Police File Criminal Charge Against Yara International

The world’s lagest fertilizer producer, Yara International, is charged with violation of the Norwegian penal code paragraph 276a, cf paragraph 276b, according to a market statement. The Norwegian company is accused of paying  USD millions US in bribe to Libyan and Indian officials in the period between 2006 and 2008. Stocks drop 4% at Oslo Stock Exchange.

“Regardless of what Økokrim conclude, these charges are very serious for Yara.”

Jørgen Ole Haslestad


The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (“Økokrim”) has launched charges against Yara International ASA.

On 8 April Yara initiated an external investigation and at the same time
notified Økokrim of the possibility that criminal offenses may have occurred before October 2008, in connection with the negotiations preceding the company’s investment in Libya.

In connection with the ongoing investigation process, a Yara employee has brought forward information relating to a separate matter, and Yara has approached Økokrim with this information.

The information relates to a project in India during the period 2006-2007.

The project aimed to establish a joint venture for the production and sale of fertilizer, but was not realized.

An initial investigation has uncovered a payment of USD 1 million to a third-party.

Based on this information Økokrim has launched an investigation.

“Regardless of what Økokrim conclude, these charges are very serious for Yara. We are cooperating with Økokrim and await the results of the investigation. I am satisfied that the investigation we have initiated has brought this matter to the surface, but disappointed that the information did not come at an earlier stage if it emerges that Yara has committed an offense,” Jørgen Ole Haslestad, President and CEO of Yara International ASA writes in the statement.

Yara International ASA is the world’s leading chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers.

International has a  global workforce of 7.300 employees.

At the Oslo Stock Exchange the Yara – YAR – share price drop more than  4% after the news about the criminal charges.

Copy of statement.

District Attorney Marianne Djupesland with  The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime  says, according to the website DN.no, that they on Wednesday executed a search warrant against the company, and then decided to file official charges against the company.

“The company has approached the Norwegian authorities, and that we see as praiseworthy. The management wants to cooperate,” she says.

The investigation will be of high priority, according to the District Attorney.

 “We’re talking about a large international company, with headquartered in Norway and the Norwegian state as a large shareholder. This is a prioritized investigate for us,”  Ms. Djupesland says.

It is the company Yara that is charged, no individuals. That means that a fine is the only possible punishment.

“It’s hard to say how this might end. But corruption has a serious penalties for individuals of up to ten years, that says something about the seriousness of a case like this,” the District Attorney points out.

She will not comment on whether it is appropriate to target individuals as well.

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Cyber Criminals Attack Critical Water, Oil and Gas Systems

For the first time, Norwegian companies are being targeted by a new kind of computer attacks, aimed at critical social management systems, like water oil and gas supply systems. The attacks was first discovered in Germany and Belarus in June. Since then, at least 6000 infected computers have been confirmed.

“A malicious foreign power  – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU.”

Charlie Miller

This summer the Norwegian National Security Authority (NSM) discovered for the first time targeted computer attacks directed against internal process and control systems to ensure supply of electricity and water. Similar attacks was discovered in Germany and Belarus. EU’s cyber-security unit, ENISA, will in late October or early November carry out the first ever pan-European cyber security exercise.

According to the Norwegian newspaper, Aftenposten, the National Security Authority confirms that Norwegian companies have been attacked, but will not say which.

“It’s the first time we see this Trojans, specifically designed to take control of the process and control systems. We know that other companies are affected, besides the Norwegians,” Christophe Birkeland at the NSM says.

Malicious software that comes into these systems, stealing business critical information, and in worst cases, destroy or take over control of the systems. We know Norwegian companies have gotten this Trojan into some of their systems,” he says.

NSM emphasizes that it is not reported any injuries at the moment.

However, NSM are now sending out a new warning against what they perceive as a serious threat to a number of critical social actors in Norway:

* Government and the national institutions.

* Power producers and suppliers.

* The oil companies.

* Water supply and treatment plants.

* Transport companies.

Going For The Most Advanced

In the operational center of Hafslund in Oslo,  computers provide electric power for about 1.4 million people in the area.

The Hafslund central is one of the world’s most advanced power systems.

“We have also experienced attempts to hack into our office support systems. We are fully focused on this, and it is a very familiar problem,” information officer, Morten Schau, at Hafslund says.

Faximile: Aftenposten, paper edition, 08292010.

Customized Trojan

Behind the seemingly innocent file name “% System% \ drivers \ mrxnet” is the malicious, and highly sophisticated,  computer virus “Stuxnet,” which this summer has been a hot topic amongst computer security experts.

The attacks may have been going on for many months before it was discovered in Germany and Belarus in June.

One of the many technical features is the fact that the Trojan hides itself very well. Since June, at least 6.000 computers have been confirmed infected by “Stuxnet”.

The cyber criminals have exploited vulnerabilities in Windows, but first in early August did Microsoft create a security update that plugged the hole.

Siemens System Infected

The attack has been directed towards a management system supplied by Siemens – Simatic WinCC.

WinCC is used to control everything from pizza ovens to oil platforms.

In Norway, the system is in use in at least 200 oil companies, power suppliers, and metal and food industries.

Siemens admits that 12 companies have been affected, but stresses that this is not its Norwegian customers.

“Those customers who were infected was quickly helped, and the problem is now fixed,” information officer, Christian Jahr, at Siemens says.

“What happened was that an employee has used a USB stick outside the office, or in other private places. This became infected with the virus, which is activated when used on a PC with WinCC installed. This goes to show that you have to be awake and updated to ensure the best security facilities possible,” Jahr says.

Who’s Fighting Who?

No one knows who is behind the attacks, or what country they come from.

Worldwide companies in Indonesia, India, Iran and the US are being hit the hardest.

There are also several different theories about what the goal is:

* Industrial Espionage.

* Blackmail.

* Sabotage attempts.

The most important way to protect themselves is to make absolutely watertight bulkhead between the data networks used to control machines, and computer systems used for communication with the outside world, according to the experts.

One must also prevent careless use of memory sticks and other USB devices.

Previously, both the police, governments, health institutions, banks and industrial companies have been hit by computer criminals.

Able To Crash The Whole EU

A malicious foreign power – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU, a US security expert says.

Charlie Miller, a mathematician who served for five years at the US’ National Security Agency stress-testing foreign targets’ computer systems and designing network intrusion detection tools,” calculated the EU scenario on the basis of a more detailed study of US vulnerability.

This is how it can be done:

Got 100 Million Dollar?

The assault would begin with a member of staff at, say, the London Stock Exchange or the French electricity grid operator, RTE, opening a PDF attachment in an email which looks as if it had been sent by a colleague.

Take down the EU, or buy a famous piece of art? (The price tag is about the same).

The PDF would contain software enabling a hacker on a different continent to silently take over his computer.

Over time, the hacker would monitor the employees’ keystrokes, sniff out passwords, and use the information to take over computers higher up the command chain, eventually putting him in a position to switch off the target’s firewalls, leaving it open to DOS (Denial of Service) attacks, and to install RATs (Remote Administration Tools), which control its hardware.

Around 18 to 21 months down the line, with enough targets compromised, the assault could take place, the EUobserver.com writes.

The EU 27 countries would wake up to find electricity power stations shut down; communication by phone and Internet disabled; air, rail and road transport impossible; stock exchanges and day-to-day bank transactions frozen.

Crucial data in governments and financial institutions are scrambled and military units at home and abroad cut off from central command or sent fake orders.

Normal life could be restarted in a few days’ time. But the damage done to administrative capacity, consumer confidence and the economy by loss of vital data would last for years.

Mr Miller says the bulk of the money –  €83 million ($105 million) would be used to pay an army of 750 hackers, with just €3 million spent on hardware – a testing lab with 50 computers, another two computers each per hacker and assorted smart-phones and network equipment.

* 100 million dollar are just small change for some of our current dictators and drug barons.

* You can win a 100 million dollar at one single game of poker in Las Vegas.

* You can earn 100 million dollars in one year as a  commodities trader at Citigroup.

* 100 million dollar is what Tiger Woods paid for his divorce settlement.

Money won’t be a problem, but organizing the the right people for the operation might be.

Army Of Hackers

An elite corps would consist of 20 world class experts whose main job would be to find “0-day exploits” – previously undetected security gaps in popular software such as Windows, Java or Adobe.

The experts would have to be paid a small fortune –  over €200.000 ($250.000) – each a year.

Or extorted, Dr. Miller adds.

Another 40 people, drawn from the enemy country’s secret services or recruited inside EU member states, would get inside “air-gapped” facilities – the most secure targets, such as military command structures or air traffic control bodies, which are physically cut-off from the Internet in order to prevent cyber attacks.

When the time came, the agents would un-airgap targets by connecting them to the Internet via 3G modems and satellite phones.

The rest of the cyber army, 690 people, mostly computer science graduates and post-graduates from inside the hostile state, would use the 0-day exploits to take over target networks.

They would also collect, maintain, create and test “bots” – software which secretly uses computers in ordinary people’s homes to run automated tasks, such as DOS attacks, which bombard target systems with overwhelming amounts of data.

The final assault would require 500 million bots in diverse locations, according to the calculations.

Dr. Miller, who currently works for the Baltimore, an US-based company, Independent Security Evaluators, admits that internet scare stories like this helps his firm to get business.

But he also underlines that classic intelligence gathering is the best line of defense, rather than hiring IT experts.

“It’s really hard to defend against an attack that’s well equipped and carried out by smart people. But you do have years to detect it before it happens. If you have an elaborate intelligence gathering network you could detect it, not technically because you can see it, but because you have human intel,” he says.

“If you want to spend your money well, spend it on your intelligence services.”

Here’s a copy of  the US National Security Agency stress testing of US and foreign computer systems.

EU’s First Cyber War Exercise

The threat of cyber war against EU targets became clear on 27 April 2007 when hackers crashed Estonian online news agencies with DOS attacks in the middle of an Estonia-Russia political dispute.

The assault gathered pace over the next three weeks disrupting online banking services and government communications.

Three and a half years down the line there is no hard evidence linking the attack to a foreign power, although activists in the pro-Kremlin youth group, Nashi, claim to have taken part.

“If these cyber attacks were used to test the Estonian cyber defense capabilities, much more sophisticated attacks could possibly follow, based on the knowledge acquired during the attacks,” a report on the 2007 events by the Estonian government’s Computer Emergency Response Team says.

NATO and EU countries are now putting more resources than ever into joint cyber-security projects.

EU’s cyber-security unit, the Crete-based European Network and Information Security Agency (ENISA), will in late October or early November carry out the first ever pan-EU cyber security exercise.

ENISA spokesman, Ulf Bergstrom, says the exercise will look at disrupting normal internet operations in the EU’s internal market and the way EU member states’ authorities co-operate across the union’s internal borders.

Mr Bergstrom notes that ENISA’s initial mandate, which covers security of e-commerce, online banking and mobile phones, is being expanded to cover cyber criminality.

“We have been given political signals, for example by information society commissioner Neelie Kroes, to work more closely with agencies like Europol and Interpol,” he says.

“Cyber security is vital for the economy of Europe, to protect the businesses and operations of ordinary citizens. This is the digital society that we take for granted, like water out of the tap, which we need to defend.”

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