Those Exceptional Cases When Real-Time Needs to be Slowed Down

Real-time delivery of information can lead to enhanced profitability, but there are times when technology may be getting ahead of the business, when things need to be slowed down. Ironically, it’s when money itself is involved.

One recent case, which recently made headlines, involved an organization’s efforts to slow things down.

Brad Katsuyama, founder of the IEX exchange, developed what is called a “speed bump” to slow down the high-frequency traders who tend to jump on trades before anyone else can, driving up prices.

As The Verge’s Ben Popper relates, “at a time when everyone was getting faster, IEX decided to get slower, delaying each trade by 350 millionths of a second, a fraction of the time it takes to blink your eye. No human would notice the difference, but it was enough to throw off systems that were trying to read and then outrun buyers.”

Recently, the US Securities and Exchange Commission officially approved the IEX as a legitimate stock exchange, which now trades 280 million shares a day.

Are there any other examples of real-time delivery that is too fast for the business to digest or manage appropriately? In another example, also involving money, real-time payments may need to have brakes installed. Emmanuel de Bouard, head of cash clearing, global transaction banking at Societe Generale, observes that “Europe does not currently have a real-time clearing system and therefore payments aren’t real-time. The information about a payment may be sent in real-time, but the actual funds are not transferred in real-time. Therefore, the beneficiary of a payment can reuse the funds from a real-time transaction immediately, but the bank will not yet have received those funds. If the initiator’s bank fails before the funds are moved, the beneficiary’s bank faces a loss.”

Other situations which may call for more thought and deliberation may be mortgage approvals. The industry has been roundly criticized for awarding mortgages to people who may have not be able to support the payments prior to the 2007-9 crash, and these concerns are being voiced again. As Tana Tymesen of National Mortgage News points out: “How fast is too fast to obtain a mortgage? For many football fans on social media during the game, it would seem ‘at the push of a button’ is too fast.”

The bottom line is there are occasions when information can outrun the business. Sometimes it may be necessary to slow down just a bit.

Related:

IoT Challenges to Ponder Before Writing Checks

Data visualization: how a futures exchange sees clearly

Deciphering the Payments Dataverse in Real-Time