Rise & Fall of High-Frequency Trading

Steve Swanson was a typical 21-year-old computer nerd with a very atypical job. It was the summer of 1989, and he’d just earned a math degree from the College of Charleston. He tended toward T-shirts and flip-flops and liked Star Trek: The Next Generation. He also spent most of his time in the garage of his college statistics professor, Jim Hawkes, programming algorithms for what would become the world’s first high-frequency trading firm, Automated Trading Desk. Hawkes had hit on an idea to make money on the stock market using predictive formulas designed by his friend David Whitcomb, who taught finance at Rutgers University. It was Swanson’s job to turn Whitcomb’s formulas into computer code. By tapping market data beamed in through a satellite dish bolted to the roof of Hawkes’s garage, the system could predict stock prices 30 to 60 seconds into the future and automatically jump in and out of trades. They named it BORG, which stood for Brokered Order Routing Gateway. It was also a reference to the evil alien race in Star Trek that absorbed entire species into its cybernetic hive mind.