Nerds on Wall Street: Math, Machines, and Wired Markets

1.1. Notes

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^[] Jargon watch: Brokers are the "sell side," while investors are the "buy side." What they buy is execution services. This includes selling securities as well as buying them. "Bagging" refers to any economic screwing of the customer. Specialists were the central traders on the NYSE, and could easily use any number of shady tactics to their advantage at the expense of the customer (e.g., selling out their inventory to a customer while holding a large sell order at a better price in their pocket). Specialists and market makers have been essentially replaced by computers, first by the fast hedge funds exploiting new "maker and taker" markets. In 2008, the NYSE retired the "specialist" term itself, replacing it with "designated market maker."

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^[] An excellent book comparing the development of the telegraph with the modern Internet is The Victorian Internet by Tom Standage (New York: Berkley Classics, 1999).

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^[] As is almost everything else. See Blown to Bits: Your Life, Liberty and Happiness after the Digital Explosion by Hal Abelson, Ken Leeden, and Harry Lewis (Boston: Addison-Wesley, 2008).

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^[] Garry Kasparov, "An Interview with Garry Kasparov," IBM Research: Deep Blue, www.research.ibm.com/deepblue/meet/html/d.1.6.shtml.

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^[] Feng-Hsiung Hsu, Behind Deep Blue (Princeton, NJ: Princeton University Press, 2004).