Could Stock Exchange be shut down by HFT attack vector?

Question

First of all, stock, not stack exchange.

I just read this post on Krypt3ia. In short, it says that HFT attack vector in combination with DDoS is possible new nemesis for stock exchange IT systems. Later on in article author describes how poor IT security is on stocks.

Anyway, as far as I know HFT is... Hmm, metodology? Technology? Well, "something" which demands extremly low latency, very accurate (and very fast) forecasting, being able to process millions of transactions if needed... All in all cutting-edge algorithms, technology and so on.

Question is - how HFT could be used as attack vector? How would that attack looks like? And, of course, could this kind of attack shut down stock exchange?

Answer 1

The key issue with high-frequency or microtrading is the latency, indeed people deploy the systems as close as they can to internet exchanges to get around the one-foot-per-nanosecond unescapable delay in sending data electromagnetically. This means a couple of things:

• if you can slow down such trades, they might take place after the opportunity has passed, or the system might have to cancel them. This could mean losing the victim money on a faulty or missed trade, but if the trade is placed despite the delay it could also have a knock-on effect on other traders (or the companies whose stock is being traded) when remote systems react to the delayed trades
• any security countermeasures implemented to protect microtrading systems cannot introduce delay into the system, without reducing the value that can be derived from such trading. Therefore you don't have to get much of a reaction from the CSO before turning the system off preferable to protecting it.