The first thing I thought when I saw the front page of the July 24 New York Times on ‘Traders profit with computers set at high speed,’ was “Great. Now we can create asset bubbles that much faster.” Sure enough, the article talked about hedge funds racing their way out of the recession through a data-set analysis called “high-frequency trading.” Imagine my surprise when Wall Street & Technology carried a story Monday morning (July 27) on a new appliance from Xtreme Data, called dbX, in which FPGAs play a key role in enabling such high-frequency trading.

Now, this entry is not intended to wag the finger at Xtreme, at Altera Corp. for the role Stratix III has at the heart of the architecture, nor at any of the software developers working on applications for dbX. After all, the Xtreme platform is a general-purpose SQL database search accelerator which could equally be used for a thousand enterprise large-database tasks – or in making National Security Agency “data mining” more efficient, for that matter.  And Xtreme Data has offered several FPGA-based platforms for the financial community before, though dbX is the first to handle unstructured ad-hoc SQL queries.

And let’s be honest along multiple dimensions: As FPGAs enter the realm of pattern-recognition, image-processing, and analysis of large data sets, there are any number of law enforcement, military, intelligence, and business applications where the core purpose of the processing raises interesting ethical questions. The financial abuse issue seems more pressing than some of these others, because few civil-liberties advocates chide individual representatives of the police, Pentagon, or NSA with becoming “hyper-snoops” precisely because the hardware tools allow such quick analysis. By contrast, as the July 25 NYT article pointed out, financial traders working with derivatives and futures contracts become asset abusers precisely because of the speed with which analysis can be made.

So does that make me some Neo-Luddite who thinks that parallel-processing tools should be kept off trading floors? Such regulations wouldn’t work even if they were instituted, since tiny FPGA boards could be snuck into the back of PCs, or placed in covert data centers in back-room locations the SEC might never discover. But it is prudent to say that Congress and the regulatory agencies need to keep a close watch on tools that allow the fast analysis of all kinds of data sets.  And since Rick Bookstaber's blog  mentioned the prospects of a "high-frequency arms limitation treaty," it's important to mention that the SALT treaties of years past successfully mandated the end to MIRVs, or multiple independently-targetable re-entry vehicles.  So it is possible to put a technology horse back in the barn by mutual consent.

We’re used to hearing about debates that focus on the military-intelligence community’s use of “Total Information Awareness” (and its successors, which live on today).  But your average NSA analyst in a foreign floor station doesn’t act like a hyper drug addict nearly as much as a Wall Street floor trader does. And without a significant amount of oversight, the financial meltdown of 2008 could happen all over again – and sooner than you think.