GPS ‘Spoofers’ could be Used for High-frequency Financial Trading Fraud

As reported, GPS “spoofers” — devices that create false GPS signals to fool receivers into thinking that they are at a different location or different time — could be used to defraud financial institutions, according to Todd Humphreys from the University of Texas.

On an innocuous level, GPS spoofing can lead to the confusing of in-car GPS systems so that users think they are in a different location to their actual location. However, a more sinister use could be to interfere with the time-stamping systems used in high frequency trading.

Financial institutions depend on timing that is accurate to the microsecond on a global scale so that stock exchanges in, say, London and New York are perfectly synchronised. One of the main ways of doing this is through GPS, and major financial institutions will have a GPS antenna on their main buildings. “They are always visible because they need a clear view of the sky,” Humphreys told Wired.co.uk.

He explains that someone who directed a spoofer towards the antenna could cause two different problems which could have a major impact on the largely automated high-frequency trading systems. The first is simply causing confusion by manipulating the times — a process called “time sabotage” — on one of the global stock exchanges. This sort of confusion can be very damaging. If the automated trading systems notice something anomalous they will back out of the market; this happened in 2010 during the Flash Crash of 2.45. Secondly, it could used by an unscrupulous individual or an organisation to change the timestamp of a particular market to give them, for example, a 20 millisecond trading advantage. They could exploit that knowledge for financial gain through inter-market arbitrage.

Humphreys and his team are not simply theorising: they have created the world’s most powerful GPS spoofer and have tested it on GPS-based timing devices used in mobile phone transmitters.

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