An extra second was added recently in the world clock on a midnight and this will be testing the highly sensitive system of trading of modern algorithm period. The testing will be beginning from the Asian markets. The extra second or the ‘leap second’ addition was the idea given by the International Telecommunication Union (ITU) which is a body of United Nations. This addition of leap second was done in order to harmonize the atomic time and the imprecise timely fashion of rotation of earth in its axis. This leap second addition has happened sometimes in the history also.
In 1972, for the first time ever in history, leap seconds were added in the world clock just for the sake of atomic time harmonization. The last time leap second addition was made in the year 1997. Since 1997, there were no leap second addition happened and now it has happened finally. This addition of leap second has got an importance in the history. This is because it was done in a highly developed electronic era which is all about technologies. And the added importance is that it will be testing the sensitivity of the trading environment.
How exactly the leap second will test trading?
On an average, majority of equities in the global trading takes place through the electronic platforms only. These electronic platforms are generally being governed by the international body for Financial Information Exchange (FIX). Not just equities, but also the trading on commodities, currencies, bonds and derivatives are done through the electronic platforms only. In the FIX, if the world clock is out of sync with the atomic clock, then the tolerance limits of an order will make it appear stale. This is a very big issue in terms of trading. The investment banks, traders and the stock exchanges have told that they were all working with the clients and vendors just by bringing their internal clocks in sync.
Head of the electronic sales have told that no one in the market actually expects a bigger impact of this tolerance case. This is because, the tolerance of an order is always greater than a second because the internal clocks of the broker and the client are not aligned same. But in this modern era of technological trading, even a single second counts a lot. The significance of a second can be realized only in this market space, he told.
The Intercontinental Exchange which is a network for exchanging commodity and financial markets has told that the addition of leap second will actually delay the market opening time. The normal time at which the markets will be opened was 2300 GMT till yesterday and from today the markets must be opened from 0001 GMT. In Asia, the time adjusting process will get varied with different exchanges. Some exchanges like Japan, South Korea and Australia will overcome the issue by adding fraction of seconds to every hour and hence the leap second will be managed the same way.
In 1972, for the first time ever in history, leap seconds were added in the world clock just for the sake of atomic time harmonization. The last time leap second addition was made in the year 1997. Since 1997, there were no leap second addition happened and now it has happened finally. This addition of leap second has got an importance in the history. This is because it was done in a highly developed electronic era which is all about technologies. And the added importance is that it will be testing the sensitivity of the trading environment.
How exactly the leap second will test trading?
On an average, majority of equities in the global trading takes place through the electronic platforms only. These electronic platforms are generally being governed by the international body for Financial Information Exchange (FIX). Not just equities, but also the trading on commodities, currencies, bonds and derivatives are done through the electronic platforms only. In the FIX, if the world clock is out of sync with the atomic clock, then the tolerance limits of an order will make it appear stale. This is a very big issue in terms of trading. The investment banks, traders and the stock exchanges have told that they were all working with the clients and vendors just by bringing their internal clocks in sync.
Head of the electronic sales have told that no one in the market actually expects a bigger impact of this tolerance case. This is because, the tolerance of an order is always greater than a second because the internal clocks of the broker and the client are not aligned same. But in this modern era of technological trading, even a single second counts a lot. The significance of a second can be realized only in this market space, he told.
The Intercontinental Exchange which is a network for exchanging commodity and financial markets has told that the addition of leap second will actually delay the market opening time. The normal time at which the markets will be opened was 2300 GMT till yesterday and from today the markets must be opened from 0001 GMT. In Asia, the time adjusting process will get varied with different exchanges. Some exchanges like Japan, South Korea and Australia will overcome the issue by adding fraction of seconds to every hour and hence the leap second will be managed the same way.