Finance sector precision timing uses and needs
| Type of trading activity | Maximum divergence from UTC | Benefits: qualitative description | Counterfactual | Technical impact metric | Economic value metric | Potential magnitude of impacts |
|---|---|---|---|---|---|---|
| HFT | 100 μs | It enables stock exchanges to handle many thousands of trades within a 1-second interval | Dedicated precision timing system (atomic clocks) for financial services sector | Bid/ask spread was down to 3 points in 2014 (from 90 points 20 years before) | Economic value of HFT (in terms of liquidity and arbitrage) | High |
| Voice trading | 1 s | Primarily used to confirm order receipts, discuss current and future market conditions, trade performance, and allocation instructions | NIST time/broadcast | No impact on trading activities | Cost of non-GPS timing system | Low |
| Request for quote system | 1 s | Provides the bidder with important information about the requirements of a specific task or project | NIST time/broadcast | No impact on trading activities | Cost of non-GPS timing system | Low |
| Negotiated transaction | 1 s | Companies can buy or sell assets and other companies | NIST time/broadcast | No impact on trading activities | Cost of non-GPS timing system | Low |
| Type of trading activity | Maximum divergence from | Benefits: qualitative description | Counterfactual | Technical impact metric | Economic value metric | Potential magnitude of impacts |
|---|---|---|---|---|---|---|
| 100 μs | It enables stock exchanges to handle many thousands of trades within a 1-second interval | Dedicated precision timing system (atomic clocks) for financial services sector | Bid/ask spread was down to 3 points in 2014 (from 90 points 20 years before) | Economic value of | High | |
| Voice trading | 1 s | Primarily used to confirm order receipts, discuss current and future market conditions, trade performance, and allocation instructions | No impact on trading activities | Cost of non-GPS timing system | Low | |
| Request for quote system | 1 s | Provides the bidder with important information about the requirements of a specific task or project | No impact on trading activities | Cost of non-GPS timing system | Low | |
| Negotiated transaction | 1 s | Companies can buy or sell assets and other companies | No impact on trading activities | Cost of non-GPS timing system | Low |
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