[ntp:questions] Re: Leap second talks are postponed

Jan Ceuleers janspam.ceuleers at computer.org
Mon Nov 21 19:31:01 UTC 2005


gomez wrote:
> On Sun, 20 Nov 2005 20:33:45 -0500, "Richard B. Gilbert"
> <rgilbert88 at comcast.net> dropped the following oil-slick:
> 
>>I believe that the requirement, in the US, for time stamping financial 
>>transactions is +/- 2 seconds.   Even if a system fails to handle a leap 
>>second properly, it should still be within specification.
> 
> 
> Robust systems do not rely on the timestamp alone to uniquely identify
> a transaction and can recover from situations where the time can be
> out be several minutes,

The transaction time-stamping requirement is not about robustness (i.e. 
certainty that the transaction is executed correctly), but rather about 
the regulatory requirement of so-called "best execution". This requires 
financial institutions to be able to demonstrate that when executing 
market trades on behalf of their clients, they do so in a way that best 
suits their clients rather than doing so in their own interests. A 
blatant contravention of this principle would be where a financial 
institution exploits the information that is implied in a client's 
market trade order for its own purposes (e.g. by performing a few trades 
for its own account) before executing the client's trade.

The order in which trades are executed is therefore important, as is the 
time taken to execute a transaction.

Jan




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