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The Trading Mesh

High Frequency Trading and Cyber Terrorism

Mon, 15 Nov 2010 18:16:00 GMT           

An Interview With Roderick Jones

This week, Mike O’Hara talks to security specialist Roderick Jones, CEO of Concentric Solutions, about the potential security risks associated with High Frequency Trading and how those risks should be managed to prevent the possibility of cyber-terrorist attacks.

Roderick is CEO of Concentric Solutions, which provides a variety of intelligence driven security solutions to private sector clients. He was educated at London and Cambridge Universities culminating in a research-based Master’s degree in medieval history. Upon graduation, he joined the Metropolitan Police in London (Scotland Yard) and was selected for the Special Branch (now counter-terrorism command). Roderick was intimately involved with the investigation of terrorist groups operating within the UK and against UK interests.

After re-locating to San Francisco he began a PhD program at UC Berkeley picking up on previous research conducted at London University on intelligence policy and systems. At the same time, he conducted consulting work for a start-up company based in Boston. In 2005, Roderick left UC Berkeley to help found Concentric Solutions, which is the primary provider of security and intelligence to a variety of innovative companies and individuals. In this role he has been able to design intelligence systems to fit into non-traditional needs and predict new threats, which is what drew him to examine a variety of new technologies and methodologies. This innovative work has led to a variety of consulting projects with the Department of Defense and the Office of Director of National Intelligence within the United States.

HFTR: Roderick, welcome to the High Frequency Trading Review. Today I wanted to offer our readers something a little bit different, in that we’ll be talking specifically about potential security risks associated with high frequency andalgorithmic trading. So can I start by asking you about your background?

RJ: Yes, sure. My speciality is in national security analysis, not specifically in high frequency trading. I used to work in the national security community in the UK and then in the US and I consult around forward-leaning problems. So for example when virtual worlds were all the rage three or four years ago, we looked at the implications of that for national security.

What strikes me most about electronic trading is the cyber-warfare aspect and the fact that nobody really has a full picture of what’s going on. The more I look at it, the more it becomes clear to me that there are some very interesting elements that could potentially be exploited by adversaries, broadly speaking. So, that’s my background and my interest in this.

HFTR: Okay, well maybe we can drill down into what some of those key risks are, as you see them. You’ve blogged about the physical security of data centres located outside of the so-called “rings of steel”, but you’ve also written about how the democratization of trading could potentially open up the markets to denial of service attacks, for example.

So Roderick, would you mind maybe spending a few minutes talking through each of these potential risks, in order that we can get a better idea of what they are?

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