Previously I listed examples of how small intervals of time are deeply rooted in modern electronic trading strategies and regulations. Although the process of buying and selling stocks, whether in a manual environment involving specialists on the floor of a major equities exchange, or in an automated environment involving two systems with complex decision rules for valuating and purchasing stocks, has significantly changed over the centuries, the outcome remains the same – to enable the exchange of shares (equity) of ownership, for a particular company, between a buyer and a seller at some agreed upon price, this is fundamentally the process of trading in the equities markets.

It is within this process that regulators and trading organizations have become incredibly sensitive to even the smallest measures of time. The trading process can be broken down into the following steps. First is the specification of the order details (eg. price, symbol, size) from the buyer or seller followed by the acknowledgment of that order by a trading venue such as an exchange, ECN, or broker dealer. The order is then optionally routed to one or more venues that will execute the trade by matching it with a counterparty order before reporting the details of the execution back to a trade-reporting facility.

Vendors, regulators, data providers, and marketers of trading technology mislead when quoting microsecond, millisecond or any temporal measures by failing to describe the inherent inaccuracies of such measures in a distributed systems context. Because the trade process described above is fundamentally distributed across machines whose concept of time is largely subjective, a measured interval of one second between any nodes in this trading process may amount to significantly more or less than one second when measured on the scale of an atomic clock.

To ensure that regulatory or strategic measures of time, are in fact accurate, it is necessary to create a single global understanding of time between related machines. Clock synchronization refers to the problems caused by clock skew and jitter, and the solutions that enable a common, more accurate understanding of time, albeit with built in margins of error.