As part of our keynote for our North American and European Enterprise Information and Master Data Management Summits this year, I explored a theme concerning man versus machine. The example I used to explore this interesting battle was the famous world chess championship in 1997 between the then Champion, Gary Kasparov, and IBM’s Deep Blue. Here is my blog giving you the details behind the one slide summary I presented at the summit: The Chess Master and the Machine – The Truth Behind Kasparov versus Deep Blue. The point of the story was that in the era of big data, now virtually part of the new normal, we should think less of “man v machine” and think more about “man and machine”.
In this mornings US print edition of the Wall Street Journal my eyes were drawn to an article on the front page of the Money & Investing section, “Man Wins Out over Machine as the London Metal Exchange Keeps Open-Outcry Trading”. The article reports that the LME has, after completing a 6 month review, decided to keep the open-outcry format where traders have to follow strict rules and talk or shout at each other to trade. Some of the roles are most interesting – such as having to keep one or both feet touching the red couch in order to trade.
Many trading floors around the world have gone digital over the years. I still remember when this first started in the UK; it was a bit of a shock but over time the efficiency of such a system becomes clear. Machine clearing for complex and high volume trading has, for the most part, made the system more efficient. There has been, of course, all manner of issues with such systems spanning flash-crashes, system crashes, and of course an even more esoteric issue, such as dark pools. The most important point I think is that the LME has not been subject to any negative press or nefarious or illegal behavior by its participants. We have all seen the issues with the Libor fixing, and the following press that stains a good reputation.
Despite the fact that the LME is smaller than it was a few years ago, it seems the process is liked and works to the degree that the participants need. If the requirements were not met, there might be a need for a more automated, speedier system. Then again, as a carbon unit, I kind of like to see some old carbon based systems working well. Makes me feel good given I spend so much waking time trying to use technology better.
The article also highlights what might not be as well known – the Chicago Board of Trade continues the same carbon based, voice driven “open-outcry” system. If you are a fan of CNBC you can see Rick Santelli every day report from that body with traders shouting behind him. Give it a whirl – it’s fun.