Of course, if this technology was able to price securities better than the market (the fundamental job of almost every market participant), it would be printing money and they would not release it.
This is not the secret sauce, but probably an implementation of a set of standard well known pricing and risk models. That's still useful, and can be expensive to develop, so thanks Goldman.
> the fundamental job of almost every market participant
Not true. You might make an argument that this is the effect of having them together in a market, but that's not their job:
- Market maker: hang around the market offering to trade with anyone (pref retail) at a spread. Doesn't care whether TSLA is gonna be able to make all those Model 3s.
- Pension fund: make sure they can pay the liabilities that are coming due. If that can be locked in, happy to pay a bit more than fair value to do so.
- Hedge fund: make absolute returns. Buy before it goes up, sell before it goes down. Whatever form of voodoo (or skill) fulfills this is fine. This doesn't have to mean finding the right price (could just mean you guess which way it's going), though of course often it is part of the objective.
- Broker: finds people on both sides of a trade. Doesn't care terribly much except to create excitement.
- Banks: lend money/securities and offer services to all of the above. Create research to make people trade. Securitise stuff so people can trade it. Often do a bit of everything.
It's akin to Facebook open sourcing their social network framework, rather than the entire personal information of all their users. Of course it's useful to some people, but it's not what makes them money.
It's probably not a download it and run it piece of software, there are probably lots of configurations and likely requires the user to provide their own models and trading rules.
To a regular software developer who uses (and does extremely minimal contributions) open source software regularly, this seems more for marketing / branding (even from an HR perspective) than for anything else (like a contribution without returns in mind).
We're reading about how GS "will" open source some software on WSJ, it would be better to just see a blog announcement with a link to the repository.
In particular, the claim that he was "open sourcing software he developed in a personal side project" turned out to be a self-serving fabrication. From the Second Circuit's opinion:
> Aleynikov’s last day at Goldman was June 5, 2009. At approximately 5:20 p.m., just before his going-away party, Aleynikov encrypted and uploaded to a server in Germany more than 500,000 lines of source code for Goldman’s HFT system, including code for a substantial part of the infrastructure, and some of the algorithms and market data connectivity programs.
> Aleynikov also transferred some open source software licensed for use by the public that was mixed in with Goldman's proprietary code. However, a substantially greater number of the uploaded files contained proprietary code than had open source software.
It's the high-tech version of a man accused of murdering his wife giving the excuse "I swear, I thought I was shooting at a burglar that had broken into our bedroom!"
Note also that while Aleynikov's conviction was vacated by the Second Circuit, it was because of a loophole. The Second Circuit decided that stolen source code did not count as a "stolen good" under the Economic Espionage Act. (Congress corrected that loophole the same year.)
You have a citation? The only case I know about is a programmer who ftp'd a whole bunch of internal code to a site in Germany before his last day of work.
GS has a track record of working well with the OSS community. They open-sourced and maintained GS-collections (now Eclipse collections), a highly-performant Java collections library that they had developed internally. They benefitted from community use and contributions, but no more than any other company that open-sources an internal project.
GS benefiting from open-source doesn't imply malicious intent.
But them making a decision to benefit themselves is not necessarily mutually exclusive to a decision that benefits other developers and the OSS community. Your point is valid, but just want to clarify that it isn't necessarily all negative.
It's likely not a huge profit decision, and the path to profit is likely very indirect. They did it probably because
- it increases its brand awareness/respect for technical customers, potential job candidates, and business partners
- it can teach finance and CS students about basic algorithms used in the industry. In some industries, it is healthier for a company's technical edge to not be so far ahead of competitors.
- the open-source """community""" (whatever that is) can find bugs and extend the software for the benefit of GS. I highly doubt this is a motive, but it's a possibility/daydream.
Am I the only one who thinks they want to push the market into applying strategies that they can then trade against? This is classic Wall Street, persuading the masses to take the wrong side of bets.
That was my first thought too. And even if that’s not what GS intends to do, it will still be the end result, because their non-public automated trading will quickly become adversarial to this.
"We deliberately release some code as open source" is very different from "everything we write is open source and a random engineer is free to independently do whatever they want with it".
"Aug. 12, 2015, 12:33 Goldman Sachs is going the way of Google and Facebook.
The investment bank is giving away some of its trading technology to clients through open-source software, according to The Wall Street Journal...."
As a general rule I assume that most “open source” software released by companies is just a recruiting tool. Some projects manage to form a community beyond the mothership, so there certainly exist exceptions, but others are to be approached with extreme caution.
This is an honest question, and forgive me if it's a bit naive, but if they release trading software to the masses under the assumption that the vast majority of users will make few changes, can they rely on the herd to buy enough stock in their software's predictions at a slower rate to get an uptick?
Take it with a grain of salt since I did not see the actual source and the article is paywalled. They are probably just releasing the tooling, not actual strategies.
Goldman Sachs does nothing that fails to profit Goldman Sachs.
This might be just PR, in which case the code could be useful for some. However, they may be doing this is because they found something that they can exploit if other people are using this code. It might be nothing particularly bad for a given user, but if a big block of investors begin using code Goldman Sachs knows intimately, the market may suddenly start doing stuff that just happens to fall to Goldman Sach's advantage.
No company does anything which doesn’t benefit them whether via tech development, attracting programming talent, reputation etc... That is why they are companies not humans. Don’t confuse the two or pile on GS just cause they are GS.
I spoke with some developers from Goldman several years ago. They couldn't even access Github website from work. Open source software and libraries were not regarded well either. Things may be changing, who knows. My impression was that Goldman is one of the most restrictive places to work.
it will probably make money, but this is the same as sp500 et al being public list of components. they know that showing their "secret" will influence the irrational market to folow suit, hence showing sp500 components will make more people buy into those and make sp500 even more profitable.
this can be an attempt at the same for the new generation. if your algo is making money and it can benefit from a mass adoption of the same strategy (or more likely they have a secret tweaked one that takes that more into account) why wouldn't they offer it in the open?
[+] [-] pantaloons|7 years ago|reply
This is not the secret sauce, but probably an implementation of a set of standard well known pricing and risk models. That's still useful, and can be expensive to develop, so thanks Goldman.
[+] [-] lordnacho|7 years ago|reply
Not true. You might make an argument that this is the effect of having them together in a market, but that's not their job:
- Market maker: hang around the market offering to trade with anyone (pref retail) at a spread. Doesn't care whether TSLA is gonna be able to make all those Model 3s.
- Pension fund: make sure they can pay the liabilities that are coming due. If that can be locked in, happy to pay a bit more than fair value to do so.
- Hedge fund: make absolute returns. Buy before it goes up, sell before it goes down. Whatever form of voodoo (or skill) fulfills this is fine. This doesn't have to mean finding the right price (could just mean you guess which way it's going), though of course often it is part of the objective.
- Broker: finds people on both sides of a trade. Doesn't care terribly much except to create excitement.
- Banks: lend money/securities and offer services to all of the above. Create research to make people trade. Securitise stuff so people can trade it. Often do a bit of everything.
Source: used to run hedge funds.
[+] [-] AznHisoka|7 years ago|reply
[+] [-] pytyper2|7 years ago|reply
[+] [-] trpc|7 years ago|reply
[+] [-] r_singh|7 years ago|reply
We're reading about how GS "will" open source some software on WSJ, it would be better to just see a blog announcement with a link to the repository.
[+] [-] mortdeus|7 years ago|reply
Didn't they like completely throw the book at him by charging him under that completely insane law the Computer Fraud Act?
[+] [-] rayiner|7 years ago|reply
In particular, the claim that he was "open sourcing software he developed in a personal side project" turned out to be a self-serving fabrication. From the Second Circuit's opinion:
> Aleynikov’s last day at Goldman was June 5, 2009. At approximately 5:20 p.m., just before his going-away party, Aleynikov encrypted and uploaded to a server in Germany more than 500,000 lines of source code for Goldman’s HFT system, including code for a substantial part of the infrastructure, and some of the algorithms and market data connectivity programs.
> Aleynikov also transferred some open source software licensed for use by the public that was mixed in with Goldman's proprietary code. However, a substantially greater number of the uploaded files contained proprietary code than had open source software.
It's the high-tech version of a man accused of murdering his wife giving the excuse "I swear, I thought I was shooting at a burglar that had broken into our bedroom!"
Note also that while Aleynikov's conviction was vacated by the Second Circuit, it was because of a loophole. The Second Circuit decided that stolen source code did not count as a "stolen good" under the Economic Espionage Act. (Congress corrected that loophole the same year.)
[+] [-] infinite8s|7 years ago|reply
[+] [-] pytyper2|7 years ago|reply
[deleted]
[+] [-] kyleblarson|7 years ago|reply
[+] [-] adenverd|7 years ago|reply
GS benefiting from open-source doesn't imply malicious intent.
[+] [-] jkchu|7 years ago|reply
[+] [-] vortico|7 years ago|reply
- it increases its brand awareness/respect for technical customers, potential job candidates, and business partners
- it can teach finance and CS students about basic algorithms used in the industry. In some industries, it is healthier for a company's technical edge to not be so far ahead of competitors.
- the open-source """community""" (whatever that is) can find bugs and extend the software for the benefit of GS. I highly doubt this is a motive, but it's a possibility/daydream.
[+] [-] alkibiades|7 years ago|reply
[+] [-] manmanic|7 years ago|reply
[+] [-] i_am_nomad|7 years ago|reply
[+] [-] voisin|7 years ago|reply
[+] [-] orev|7 years ago|reply
[+] [-] ceejayoz|7 years ago|reply
[+] [-] chrisfinazzo|7 years ago|reply
https://arstechnica.com/tech-policy/2009/07/goldmans-secret-...
[+] [-] 0815test|7 years ago|reply
And this is why people are saying to exercise caution around this stuff!
[+] [-] geodel|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] kartan|7 years ago|reply
"Aug. 12, 2015, 12:33 Goldman Sachs is going the way of Google and Facebook. The investment bank is giving away some of its trading technology to clients through open-source software, according to The Wall Street Journal...."
Am I missing something?
[+] [-] ForHackernews|7 years ago|reply
[+] [-] maxaf|7 years ago|reply
[+] [-] gfiorav|7 years ago|reply
[+] [-] UnpossibleJim|7 years ago|reply
[+] [-] infecto|7 years ago|reply
[+] [-] beloch|7 years ago|reply
This might be just PR, in which case the code could be useful for some. However, they may be doing this is because they found something that they can exploit if other people are using this code. It might be nothing particularly bad for a given user, but if a big block of investors begin using code Goldman Sachs knows intimately, the market may suddenly start doing stuff that just happens to fall to Goldman Sach's advantage.
[+] [-] qpotlpus|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] alexeiz|7 years ago|reply
[+] [-] mehdizare|7 years ago|reply
[+] [-] SanchoPanda|7 years ago|reply
[+] [-] AtlasBarfed|7 years ago|reply
Not unlike the magic numbers the NSA suggested for various encryption schemes.
[+] [-] holografix|7 years ago|reply
[+] [-] gcb0|7 years ago|reply
this can be an attempt at the same for the new generation. if your algo is making money and it can benefit from a mass adoption of the same strategy (or more likely they have a secret tweaked one that takes that more into account) why wouldn't they offer it in the open?