Cloud Trading Fairness Problem

One key consideration is “provable fairness”. It’s my understanding that exchanges use techniques like long, same length fiber optic cables to all racks within the exchange datacenter to convince customers that everyone is on a fair playing field. This is a lot harder to do when a server is virtualized somewhere on some rack on EC2. Exactly as mentioned, people will try to optimize by spinning up/down instances as close to the exchange server as possible. Customers will be unhappy because they can’t prove that it’s fair, even if they have the closest server.

A text-based technical joke about high-frequency trading exchanges, fiber optic cables, and servers running on Amazon EC2. The punchline is that cloud virtualization makes it impossible to prove every customer has an equally fast connection, inviting traders to optimize server placement and dispute whether the playing field is fair.

• @jemalloc / 1556 2024-04-16