The New York Stock Exchange is no stranger to fraud. Ponzi schemes, insider trading, pumping and dumping are all synonymous with The Stock Exchange. Stock fraud happens, and it happens more often than we all think, and millions (if not billions) of dollars are lost every year as a result.
To help reduce the problem and tighten security, the New York Stock Exchange will be partnering up with AeroScout to create a real-time locating system (RTLS) that will track RFID embedded handheld computers. By doing this, traders will not be able to pass from one trading floor to another with their handheld computers, and therefore will not be able to make unauthorized transactions.
Every tablet will have an RFID tag on it, which has a unique ID number associated with the trader who is using that specific tablet. It will include data such as the trader’s name and where that tablet is permitted to be used, or rather what floor it is allowed to be on. Every time and anywhere that tablet moves, a signal is emitted and picked up by RFID readers that are placed all over the facility. That way it will be noted if the trader is in an unauthorized area, when, for how long, and what data was being exchanged during that process.
The NYSE will be giving traders a Fujitsu tablet computer that will let them conduct trading, communicate with others who are another floor, as well as searching for information on the internet. Regulations require that traders cannot carry these tablets from one floor to another, where they can attain non-public information about certain companies that could be used to unfairly make sales transactions and therefore would have an effect on stock value.
Another benefit of this is that it will eliminate the need for security guards on the NYSE’s floor who are hired to prevent computers from being passed from one floor to the next. This does save money, but a huge part of it is that there’s always room for human error, as well as corrupted security guards who may take a payoff in exchange for keeping their mouths shut. I’m not saying that this actually does happen, but it might, and we may not know about it.
This is a pretty good idea, and I’m curious to know if this new strategy angers traders that work at the New York Stock Exchange. It will definitely help fraud inside the actual facility, but there are plenty of other stock crimes that can take place outside of the facility. Let’s see what happens.