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Wall Street To Hold Quantum Dawn 2, Cyber-Attack Drill

samzenpus posted about a year ago | from the protect-ya-neck dept.

Security 55

BioTitan writes "It will be determined whether Wall Street could withstand a coordinated, large-scale cyberattack during the Quantum Dawn 2 exercise on July 18. Top firms will work together and with the government to find weak points in their systems. The exercise is a major shift from the first Quantum Dawn in November 2011, which simulated a physical terrorist attack on Wall Street (there was no physical exercise, it was all behind computers), and had firms try to prevent a mock stock market from crashing."

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Hello (2, Funny)

Anonymous Coward | about a year ago | (#44128113)

Would you like to play a game?

Re:Hello (1)

Anonymous Coward | about a year ago | (#44128273)

At least get the quote right: "Hello, David. Do you wish to play a game?"

Re:Hello (1)

msauve (701917) | about a year ago | (#44128403)

"Would you like to play a game?"

Indeed.

The stock market isn't that much different than Las Vegas. They'd have you think it's all about owning fractional value of companies, but like fiat currency, it's more about faith than fact. It's like legalized betting, nudge nudge wink wink.

The main difference is that the stock market has an air of respectability. But in Las Vegas, you know the odds, and they change them less often. On Wall St., the line is just more complex. In both cases, the odds are against the small player.

Re:Hello (2)

the eric conspiracy (20178) | about a year ago | (#44128453)

> The stock market isn't that much different than Las Vegas.

Las Vegas is a zero sum game.

Wall Street is a positive sum game.

Huge difference.

Re:Hello (1)

Pseudonym Authority (1591027) | about a year ago | (#44128745)

Wall Street is only a positive sum in the medium to long term. Most `investing' is done on the microsecond length, making it very much a zero sum game.

Once the exchange and brokerage fees are added in, it's probably a negative sum, as the middle men are removing money.

Re:Hello (1)

the eric conspiracy (20178) | about a year ago | (#44129035)

Umm no. Transaction costs are quite low these days. All that computerization you know.

If it weren't that way HFT would not be useful. Large brokerages aren't sinking money into that just for fun.

Even for Joe Mainstreet stock purchase transactions can be ridiculously inexpensive. Fees in the single digit dollar levels and no carrying charges for 6 figure transactions. i.e. less than 0.001%.

Add in the fact that since 1901 stocks have appreciated an average of 9% per year compounded. It is a pretty compelling game that returns many billions per year to individuals and institutions like pension funds.

http://observationsandnotes.blogspot.com/2009/03/average-annual-stock-market-return.html [blogspot.com]

Re:Hello (0)

Anonymous Coward | about a year ago | (#44129053)

Can Joe Mainstreet afford a six figure stock transaction?

Re:Hello (1)

the eric conspiracy (20178) | about a year ago | (#44129117)

> Can Joe Mainstreet afford a six figure stock transaction?

Average net worth at age 65 is $200,000

Re:Hello (1)

BonThomme (239873) | about a year ago | (#44129637)

I think you mean median family net worth.

Re:Hello (1)

smellotron (1039250) | about a year ago | (#44129765)

Average net worth at age 65 is $200,000

How much of that worth is available to be put into a high-risk investment? Suppose we are generous and say that some 65-year old is willing to risk 1/4 of his worth for the chance to earn more than the going interest rate. That's $50,000. Now suppose that in order to diversify risk, that gets split up into 5-10 different stocks or ETFs. Now we're down to $5-10k apiece. A $5 trading fee on that amount is 10-20 basis points, which is lower than changing currency but still two orders of magnitude above the rate you quoted. And this still assumes trading the entire position in one stock/ETF. Suppose that the investor rebalances the whole portfolio once every quarter, and each rebalance only involves a trade in half of the stocks. A $5 per-trade fee works out to $50-100 annually, again 10-20 basis points. That doesn't sound so good to me, and it's certainly nothing close to the notional fees payed by HFT or other professional traders.

Re:Hello (1)

Chris Mattern (191822) | about a year ago | (#44131671)

> Can Joe Mainstreet afford a six figure stock transaction?

Average net worth at age 65 is $200,000

So, the answer is "no." Anybody who puts half his net worth in a single stock transaction is either a fool or a madman.

Re:Hello (1)

Johann Lau (1040920) | about a year ago | (#44131793)

Ummm, yes. Removing a small amount is still removing.

Don't drink that kool-aid, it's poisoned (1)

Anonymous Coward | about a year ago | (#44132169)

Las Vegas is a zero sum game.
Wall Street is a positive sum game.

That's only true if you are the house, collecting the vigorish.

For everyone else it's just a two different ways to gamble, with the system scaled so an encouraging number of big winners draw in a huge number of losers. In the case of Las Vegas this is fairly open and aboveboard, in the case of Wall Street it's a farcical, cynical charade designed to make chumps think they can make it into the 1%. In reality you don't make it into the US economic aristocracy unless you are born to it or somebody else decides to lift you into it. The barriers to success in business and stocks are set no less cynically than in Las Vegas.

Is that why... (0)

Anonymous Coward | about a year ago | (#44128149)

Is that why gold is crashing? Its just a joke, right? Hahahaha. Right?

Put lots of mice (4, Funny)

TheModelEskimo (968202) | about a year ago | (#44128219)

...in your A/C ducts. Also make the openings in the ducts hard for people to get through. And always, ALWAYS check every firefighter or SWAT guy who comes through the building, even if he is ordering you around.

Now if this is a 100% software-based cyber-attack, just put "LATEST SYSTEM (TM)" somewhere on your screen so the enemy IT guys can just tell their boss, "I can't do this, it's the LATEST SYSTEM." That way they are forced to go "STRAIGHT IN" which, see firefighter advice above.

Re:Put lots of mice (1)

erpbridge (64037) | about a year ago | (#44129551)

Lots of mice... PS2 or USB? Corded or Wireless? Analog with ball, or optical?

Re:Put lots of mice (1)

smellotron (1039250) | about a year ago | (#44129735)

Analog with ball, or optical?

Ball mice, with lots of hair! Give them hell.

No, no, no. (1)

Etherwalk (681268) | about a year ago | (#44128241)

Firms which have to have consumer confidence in order to attract business will respond differently to a simulation where the goal is to keep the market alive than they will to an actual emergency where the goal is not to lose all their money.

Major Security Hole (2)

puddingebola (2036796) | about a year ago | (#44128255)

A major security hole was discovered when it was found that major banks could buy and trade stacks of shit mortgages insured by the nation's largest insurance companies.

Re:Major Security Hole (4, Insightful)

Opportunist (166417) | about a year ago | (#44128955)

Doesn't matter.

We're looking for holes that work AGAINST the interests of big money, not FOR them.

And I should care? (2)

Jane Q. Public (1010737) | about a year ago | (#44128277)

I hope it fails, and fails big.

It's high time people stopped confusing Wall Street with "the economy". A very large part of Wall Street anymore is little more than a glorified casino. And high-frequency trading combines the casino with a horse race.

Wall Street (3, Insightful)

Etherwalk (681268) | about a year ago | (#44128329)

A good part of the consumer wealth in this country is invested on wall street. As a result, when the market contracts, people become more worried about their retirement and become less willing to spend money.

Shortly after BoA bought Merrill Lynch, I happened to be in Sears buying two ovens. I was the only one in the store. I also bought a car a few days later, at the end of the quarter, and was able to get a great deal because nobody was buying.

What happens on Wall Street does a huge amount to shape the willingness of people to spend money--including the willingness of endowed institutions to spend money. That makes it important to the economy.

Re:Wall Street (3, Insightful)

fuzzyfuzzyfungus (1223518) | about a year ago | (#44128341)

It is unquestionably a dangerously concentrated potential point of failure for a lot of broader economic activity. Whether it has commensurate benefits that would qualify it as 'important' is a slightly different question.

Re:Wall Street (3, Insightful)

Jane Q. Public (1010737) | about a year ago | (#44129263)

Thank you. You put it more concisely than I did.

When a large percentage -- MAYBE even the majority, I don't know -- of "investment" is no longer in the means of production, but instead is just a bunch of asshats trading fictional derivatives with each other, it puts "the economy" in danger. That's not investment. I've said it before and I'll say it again: it's gambling. Plain and simple. Government-sanctioned gambling, with other peoples' money.

Re:Wall Street (1)

Jane Q. Public (1010737) | about a year ago | (#44129239)

"A good part of the consumer wealth in this country is invested on wall street"

Ah... but should it be? That's more the point I was talking about.

Wall Street was supposed to be about investing in corporations that were involved in production. Now it's largely (maybe even mostly?) just a circle-jerk of suits trading derivatives with each other. That's not an "investment", that's gambling.

"...when the market contracts, people become more worried about their retirement and become less willing to spend money."

Good. Because that's part of the problem: these so-called "economists" who are obsessed with spending.

Spending isn't wealth. Savings are wealth. American NEEDS to "contract" its spending, and start saving again.

"What happens on Wall Street does a huge amount to shape the willingness of people to spend money--including the willingness of endowed institutions to spend money. That makes it important to the economy."

I don't dispute that. But I do have 2 things to say about it: the first is what I just said above. The second is that yes, it is important to the economy. More important than it SHOULD be, in a rational world.

Re:And I should care? (1)

Fluffeh (1273756) | about a year ago | (#44128423)

I hope it fails, and fails big.

Not going to happen. Think back to when they were going broke because of choices they made with what they *should* know, namely money. Given that IT departments are cost centres, not profit centres, do you think they really try to make sure their systems are secure and bullet-proof? Or do you think they simply look at a report given to them by the company that did their security and of course that says their security is great.

The folks probing the systems here are probably the same people that put the security in in the first place. The folks doing to probing also know that to maintain consumer confidence ni Wall Street (the average folk anyhow) you need to give them a scorecard that starts and ends with A's.

Want to do a real test, get a bunch of black hats in there pushing buttons. Of course, if they get in... they might not just give up all the gaps in their final report.

Re:And I should care? (1)

Jane Q. Public (1010737) | about a year ago | (#44129273)

"Not going to happen..."

Well, if you look at it that way. The way I see it is: Wall Street has already failed, and needs to be re-built from the ground up.

"The folks probing the systems here are probably the same people that put the security in in the first place. The folks doing to probing..."

I like the way you put that. Probing. How amazingly appropriate.

Re:And I should care? (1, Insightful)

the eric conspiracy (20178) | about a year ago | (#44128435)

Yes, you should care. The financial markets are the major source of funding for both private and public projects. Without it businesses and governments would be unable to raise the capital needed for any number of the basic structural needs of modern society. When your local town wants to raise money for a new school, or a new water treatment plant where do you think the bonds for it are sold?

The idea that it is a casino + horse race is something promulgated by the popular media who know little or nothing about the real nature of these markets or the economic system they live in.

Re:And I should care? (1)

fustakrakich (1673220) | about a year ago | (#44128533)

Boy, does that sound like 'reputation management', or what? Right now Wall Street is extorting 45 billion (with a B) a month out of us, the taxpayers, and threatening to shut the whole thing down if the flow, I believe the phrase is, 'tapers off'. The 'financial markets' need to lose their privileged status of 'too big to stop'.

Re:And I should care? (2, Informative)

the eric conspiracy (20178) | about a year ago | (#44128957)

I assume you are referring to the indirect purchase of GOVERNMENT issued debt by the FEDERAL Reserve aka Quantitative Easing?

Well. you have just about every fact in your post either flat out wrong or completely muddled. First it's 85 billion a month, and second the money flow is this:

1. Federal Gov issues bonds.
2. Banks buy the bonds.
3. Federal Reserve buys the bonds from banks.

Note this is a flow of money TO the government from the banking system. The banks are simple intermediates in the process. They don't profit on the transaction.

What does happen is the banks deleverage. They have less money loaned out In this case to the Federal Government). This allows the banks to make more loans. Because of the increased demand for bonds the overall interest rates decline. Because the banks have less debt and can loan more interest rates decline.

The idea that this is extorting money from the taxpayers is complete unvarnished BS.

I have a couple of suggestions for you:

1. Don't start off you post with an ad-hominem attack.
2. Learn something about what you are posting on before you make yourself look really bad when you respond.

Re:And I should care? (3, Insightful)

Jane Q. Public (1010737) | about a year ago | (#44129335)

"... the indirect purchase of GOVERNMENT issued debt by the FEDERAL Reserve aka Quantitative Easing?"

The Federal Reserve is about as "federal" as my neighbor's hemorrhoids. Other than having some people on the board government-appointed, it's not government at all. Each of the 12 Federal Reserve Banks is little more than a co-op of PRIVATE member banks, many of them largely owned by foreign interests.

"Note this is a flow of money TO the government from the banking system. The banks are simple intermediates in the process. They don't profit on the transaction."

Go back to school yourself. Quantitative Easing, by definition, is the buying of bonds WITH NEWLY CREATED DOLLARS. And I'll let you in on a little clue: the government pays interest on every one of those dollars created by the Federal Reserve.

It is BY DEFINITION inflationary. It is INTENDED TO BE inflationary (Bernanke's own words). And that inflation takes money straight out of citizens' pockets. Don't believe me? Compare your grocery bill to what it was 5 years ago. And commodities like food are among the FIRST things to go up.

"The idea that this is extorting money from the taxpayers is complete unvarnished BS."

It is nothing of the sort. The taxpayers get the money extorted from them all right. Just not directly. That's the beauty of the Federal Reserve system. Much of that loss comes from eventual higher government debt and inflation. But you had better believe it is real.

Re:And I should care? (0)

Anonymous Coward | about a year ago | (#44131805)

Don't let people know the Fed practically gives Trillion of free money to foreign banks too. They don't give a shit about your dollar. Besides, do you think a millionaire even feels the cost of milk going up?

Re:And I should care? (1)

the eric conspiracy (20178) | about a year ago | (#44132139)

Wrong again, in many ways.

1. The banks aren't extorting anything. They are not getting any significant profit from this, only some small short term benefits from the origination of new mortgages. The interest rates they loan money at, and in particular the flatness of the yield curve is suppressing their normal profitability, quite severely. Meanwhile Americans taking loans to buy homes are making out like bandits with the low loan rates.

http://www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&assetID=1245346055206 [standardandpoors.com]

2. It isn't particularly inflationary. Low interest rates increase money supplies a bit, yes, because of the loans. But the money printing is not because the money the Fed creates is held in reserve accounts at the Fed. It never goes into circulation. Why do you think inflation rate has been ZERO three out of the past four months?

http://online.wsj.com/article/SB10001424127887324081704578233751687277638.html [wsj.com]

3. The government pays interest because of the loans it issues. It would ALWAYS pay interest regardless of whether the Fed bought the loans or not. What the Fed purchase does is a gift to the taxpayers because the resulting interest rates are much LOWER than would be the case in a free market.

Re:And I should care? (0)

Jane Q. Public (1010737) | about a year ago | (#44136619)

"1. The banks aren't extorting anything. They are not getting any significant profit from this, only some small short term benefits from the origination of new mortgages. "

1. Not wrong. If you don't understand how banks, Wall Street, and government profit across the board from inflationary policies, you need to re-take Econ 101. The "delay factor" in inflation alone is enough to make it worth their while. While at the same time, the average consumer loses.

"2. It isn't particularly inflationary. Low interest rates increase money supplies a bit, yes, because of the loans. But the money printing is not because the money the Fed creates is held in reserve accounts at the Fed. It never goes into circulation. Why do you think inflation rate has been ZERO three out of the past four months?"

2. Holy crap, man. Quantative Easing IS INTENTED TO BE INFLATIONARY, AND IT IS!!! According to the Federal Reserve's own chairman, they have been doing it TO KEEP INFLATION UP and fight off that horrible (but largely imaginary) demon of "deflation"!

Read the f*ing news. And I repeat: take a closer look at your grocery bill. Because it's not just in the news; the proof is all around you.

"3. The government pays interest because of the loans it issues. It would ALWAYS pay interest regardless of whether the Fed bought the loans or not. What the Fed purchase does is a gift to the taxpayers because the resulting interest rates are much LOWER than would be the case in a free market."

Do you have reading comprehension issues? Let me lay this out again for you, in simple, straightforward terms:

(A) "Quantitative Easing" is the practice of buying government debt WITH NEWLY CREATE DOLLARS. That's what it is. That is the definition.

(B) The Federal government pays interest on EVERY new dollar the Federal Reserve creates, for ANY reason. They do. Look it up.

Re:And I should care? (1)

kilfarsnar (561956) | about a year ago | (#44132003)

I assume you are referring to the indirect purchase of GOVERNMENT issued debt by the FEDERAL Reserve aka Quantitative Easing?

Well. you have just about every fact in your post either flat out wrong or completely muddled. First it's 85 billion a month, and second the money flow is this:

1. Federal Gov issues bonds. 2. Banks buy the bonds. 3. Federal Reserve buys the bonds from banks.

Note this is a flow of money TO the government from the banking system. The banks are simple intermediates in the process. They don't profit on the transaction.

If they don't profit from the transaction, then why do they do it? Altruism? Because they're supposed to? Or do they collect fees on those transactions?

The idea that this is extorting money from the taxpayers is complete unvarnished BS.

Really? "We need $700 billion or the world financial system collapses" isn't extortion in your book?

Re:And I should care? (1)

Jawnn (445279) | about a year ago | (#44131567)

I hope it fails, and fails big. It's high time people stopped confusing Wall Street with "the economy". A very large part of Wall Street anymore is little more than a glorified casino.

Except for the fact that Joe Mainstreet still has large chunks of his "retirement" on account for the gamblers to use. When the gamblers go bust, so does Joe Mainstreet, thereby, lots of the businesses on Mainstreet, and those, without question, are "the economy".

Pre-failed (0)

Anonymous Coward | about a year ago | (#44140417)

Test is a joke, probably a mandated joke. Attack may or may not penetrate, but can certainly disable service in the first three seconds.

Results announced guaranteed to be, "Lessons learned, improvements can be made", as they bulldoze the smoking ruins of 10,000 servers into the river, metaphorically speaking of course.

Fear of finance without Wall Street (4, Interesting)

Animats (122034) | about a year ago | (#44128349)

When lower Manhattan flooded last winter, the systems behind the exchanges were just fine. None of them are actually in Manhattan. (The big NASDAQ billboard at Times Square is just advertising. There is no NASDAQ facility at that location.) NASDAQ doesn't even have a trading floor. NYSE/Euronext was prepared to shift trading control to Chicago, where they also own Arca, another exchange.

The Wall Street firms panicked at the plan for trading going on without them. They demanded that the exchanges be shut down until the firms could get back up. That was done.

Re:Fear of finance without Wall Street (1)

Ryanrule (1657199) | about a year ago | (#44128991)

You give control to chicago, you are not getting it back. What control? I didnt see any control. Must have fell off the truck.

Re:Fear of finance without Wall Street (1)

smellotron (1039250) | about a year ago | (#44129565)

You give control to chicago, you are not getting it back.

Oh yeah, that explains why the Chicago Stock Exchange is totally dominating the exchange space.

Opportunity (1)

Anonymous Coward | about a year ago | (#44128823)

Seems like this would be the optimal time to perform actual attacks since they may be mistaken for part of the testing and not be taken as seriously. These tests shouldn't be announced publicly or to those who's skills will be tested.

Nothing to report, it was a great success! (2, Insightful)

Anonymous Coward | about a year ago | (#44128825)

Let's be serious here.

Does anyone actually think that the public would hear about anything other then "It was a great success, everything is as it should be"?

They will find holes. I'm sure certain people will be slack jawed at the shit they find. In the end, it will all be covered up because nobody wants to change anything or spend any money actually improving the system. You will hear nothing other then what a tremendous success the exercise was, because anything other then that would expose the idiocy of the people in charge of the system.

In other words, the entire story is nothing but PR bullshit. It doesn't matter what they find because you'll never hear about it.

Wall St. vs. Terrorists (2)

jd2112 (1535857) | about a year ago | (#44128843)

Honestly, I can't pick a side. Either for or against.

Re:Wall St. vs. Terrorists (1)

Opportunist (166417) | about a year ago | (#44128969)

It's a bit like Alien vs. Predator, isn't it?

Whoever wins. We lose.

Re:Wall St. vs. Terrorists (0)

Anonymous Coward | about a year ago | (#44130431)

But we get some nifty weapons in the process. Quantum Dawn sounds like a movie title about drowsy quants desperately trying to get to work despite of the allures of a warm bed. Quantum Dawn 2 is the riveting sequel, with hackers, Manhattan hot dogs and the unbearable sleepiness of lunchtime.

They can read Tom Clancy's (0)

Anonymous Coward | about a year ago | (#44128973)

Debt of Honor to get a few ideas. Might want to update the nationality of the attacker, though.

Quantum Dawn 2? (2)

AchilleTalon (540925) | about a year ago | (#44129255)

What a stupid name for such an operation!

Re:Quantum Dawn 2? (0)

Anonymous Coward | about a year ago | (#44129503)

Its only a small step between success and market crash...

Re:Quantum Dawn 2? (0)

Anonymous Coward | about a year ago | (#44133515)

What about "Quantum Dawn 2: Electric Boogaloo"?

Heh (1)

Anonymous Coward | about a year ago | (#44129813)

It would be fucked up if attackers decided to launch an attack the same day.

Be afraid, be very afraid. (1, Troll)

advocate_one (662832) | about a year ago | (#44130621)

Pull as much money out of your accounts into cash as you can right now, just keep enough in to cover direct debits/standing orders as they occur. These bastards are about to crash the entire system and leave everybody except those in the know without access to their money or the ability to use their cards at the checkouts.

Re:Be afraid, be very afraid. (1)

Hentes (2461350) | about a year ago | (#44132835)

I don't think that would benefit them, otherwise they would've done it already...oh, wait.

Quantum Dawn (1)

TWiTfan (2887093) | about a year ago | (#44131355)

Oh man, I just hope Charlie Sheen is in this one too.

Except. (0)

Anonymous Coward | about a year ago | (#44131453)

Because of the antics of Wall Street in recent years, many of us in the IT community are witholding our technology in Cyber Attack/Defense, at least from Wall Sreet.

Ironically (0)

Anonymous Coward | about a year ago | (#44131811)

I am at one of those firms and our content filter blocks TFA.

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