Views from FYR of Macedonia: Russia, the West, America

Views from FYR of Macedonia: Russia, the West, America

After sharing with some people an article on new software for US military cargo helicopters to take more autonomous decisions*, a Macedonian in the group wrote (Spanish):

Si, tenemos suerte y los rusos nos defienden. Si no estamos j[xxx]dos con los americanos y sus maquinas de muerte

Translation: Yes we are lucky that the Russians defend us. If not, we would be [doomed] by the Americans and their Machines of Death.

 
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The article: Navy Drones With a Mind of Their Own. WSJ, Apr 5, 2014. https://www.wsj.com/articles/navy-drones-with-a-mind-of-their-own-1396668616

Navy Drones With a Mind of Their Own

Newly Unveiled Technology Runs on Tablet App, Enables Unmanned Aircraft to Choose Flight Routes and Landing Sites

[photo removed: The U.S. Navy has unveiled new drone technology that allows the craft to take off and plot its routes autonomously, without a ground-based pilot. The drones carrying the new software will likely be deployed within a year. Photo: Office of Naval Research]

 

By Dion Nissenbaum

Updated April 5, 2014 12:08 a.m. ET

WASHINGTON—Rear Adm. Matthew Klunder has positioned himself to become the Jeff Bezos of the Pentagon.
Much as the Amazon.com Inc. founder envisions mini-drones that deliver small packages across America, Adm. Klunder, the Navy's research chief, wants to create innovative unmanned helicopters able to perform tasks now carried out by humans: resupplying troops in remote areas and rescuing wounded Marines from the battlefield.
His plan is moving ahead, and Navy officials will unveil new technology Saturday that with the push of a button allows helicopters—manned or unmanned—to choose their own routes, take off and land.
The Navy views the five-year, $100 million program as a major advance in the Pentagon's hopes for taking the "manned out of unmanned" aircraft. Over the next decade, the military is aiming to create autonomous drones that can help soldiers carry out night raids, search oceans for trouble, and select targets for attack.
[photo removed: Lance Cpl. Cody Barss uses a tablet computer during a demonstration in Quantico, Va., of a system that could support forces on the front lines, as an alternative to convoys, manned aircraft or air drops. U.S. Navy]
This is "truly leap-ahead technology," Adm. Klunder said of the new autonomous helicopter advances.
"What we're talking about doing with full size helicopters—and we've done it—we're talking about delivering 5,000 pounds of cargo," he said.
The Navy program has put the system through successful test runs at the Marine Corps Base in Quantico, Va.
Using a special app and a tablet, operators given only a half-hour of training were able to direct small helicopters to land on their own. The helicopters can choose their own routes, pick landing sites and change their destination if they spot unexpected obstacles that emerge at the last minute.
Autonomous technology will make it easier for the military, which won't have to rely on highly trained operators to route and land helicopters.
But while it could mark the advent of an era in which the military operates more sophisticated equipment with fewer people, it also is likely to stir concern about an overreliance on technology.
"We're starting to move into an autonomous regime, and that's going to have hugely disruptive effects," said Shawn Brimley, a former Pentagon official who is now executive director of the Center for a New American Security. "I would almost call it a revolution."
To some, the foray into autonomous aircraft is a move that conjures images of killer drones, capable of choosing targets and hunting them down without human oversight.
To address those concerns, the Pentagon has devised special guidelines meant to ensure that the military won't allow drones to carry out "kill missions" without human involvement.
Autonomous drones that require less human oversight could also take some strain off the Pentagon as it cuts back the size of the military to deal with budget cuts.
The Pentagon's expanding drone fleet has limited ability to operate autonomously. The Navy's experimental combat drone, the X-47B, landed itself on an aircraft carrier last July. The Army wants to create a robot that can operate on its own in helping soldiers search for suspects.
The Navy and the Marine Corps envision using the autonomous helicopter technology to more easily fly tons of supplies to remote bases. Military developers are even talking about the prospect of using the system to carry out emergency battlefield evacuations for troops.
The new systems, developed by Lockheed Martin Corp. and Aurora Flight Sciences, are designed to be used on the Pentagon's biggest helicopters, officials said.
Development still has a way to go. The new drone capabilities still must face more challenging trials, such as flying at night and in difficult weather. But military officials expressed confidence they could begin using the system in a year.
"As far as innovative projects go, I can't think of one that's more important to the Marine Corps right now—or one that shows as much promise," said Brig. Gen. Kevin Killea, commander of the Marine Corps Warfighting Laboratory and Adm. Klunder's deputy.
 

The Responsible Way to Rein in Super-Fast Trading - by Gary Cohn

The Responsible Way to Rein in Super-Fast Trading. By Gary Cohn
At Goldman Sachs, we would back these measures to limit the risk and instability that technology gains brought.
WSJ, March 20, 2014 8:05 p.m. ET
http://online.wsj.com/news/articles/SB10001424052702303563304579447692855042948

Equity-market structure in the U.S. has made important advances over the past 20 years, promoting greater transparency and liquidity. Three powerful forces have been at work: technology, regulation and competition. The result has been narrower spreads, faster execution and lower overall explicit costs to trading stocks.

With the overwhelming majority of transactions now done over multiple electronic markets each with its own rule books, the equity-market structure is increasingly fragmented and complex. The risks associated with this fragmentation and complexity are amplified by the dramatic increase in the speed of execution and trading communications.

In the U.S., there are 13 public exchanges and nearly 50 alternative trading systems. Regulation NMS (National Market System), adopted in 2007, requires that market participants route their orders to the exchange that displays the best public price at any given time. This has increased both the number of linkages in the market and the speed at which transactions are done. The Securities and Exchange Commission has correctly called for an "assessment of whether market structure rules have kept pace with, among other things, changes in trading technology and practices."

In the past year alone, multiple technology failures have occurred in the equities markets, with a severe impact on the markets' ability to operate. Even though industry groups have met after the market disruptions to discuss responses, there has not been enough progress. Execution venues are decentralized and unable to agree on common rules. While an industry-based solution is preferable, some issues cannot be addressed by market forces alone and require a regulatory response. Innovation is critical to a healthy and competitive market structure, but not at the cost of introducing substantial risk.

Regulators and industry participants, including asset managers, broker-dealers, exchanges and trading firms, have all put forth ideas and reforms. We agree with a number of their concerns and propose the following four principles:

• First, the equity market needs a stronger safety net of controls to reduce the magnitude and frequency of disruptions. A fragmented trading landscape, increasingly sophisticated routing algorithms, constant software updates and an explosion in electronic-order instructions have made markets more susceptible to technology failures and their consequences.

We propose that all exchanges adopt a stringent set of uniform, SEC-mandated execution controls to reduce errors. In addition to limit-up, limit-down rules that prevent trades from occurring outside a specified price band, pre-trade price and volume limits should be implemented to block problematic orders from entering the market. Mechanisms should also be introduced to halt a firm's, market maker's or other entity's trading when an established threshold is breached, thus minimizing the uncontrolled accumulation of trades.

• Second: Create incentives to reduce excessive market instability. The economic model of the exchanges, as shaped by regulation, is oriented around market volume. Volume generates price discovery and liquidity, which are clearly beneficial. But the industry must recognize how certain activities related to volume can place stress on a market infrastructure ill-equipped to deal with it.

Electronic-order instructions connect the objectives of buyers and sellers to actions on exchanges. These transaction messages direct the placement, cancellation and correction of orders, and in recent years they have skyrocketed. In the 2010 "flash crash," a spike in the volume of these messages exacerbated volatility, overwhelming the market's infrastructure.

According to industry analysis, since 2005 the flow of these order instructions sent through U.S. stock exchanges has increased more than 1000%, yet trade volume has increased by only 50%. One consequence of the enormous growth in order-message traffic is that increasingly the quote that an investor sees isn't the price he or she can transact, as orders often get canceled at lightning-quick speeds.

Currently there is no cost to market participants who generate excessive order-message traffic. One idea would be to consider if regulatory fees applied on the basis of extreme message traffic—rather than executions alone—are appropriate and would enhance the underlying strength and resiliency of the system. Regulators in Canada and Australia have adopted this approach.

• Third: Public market data should be disseminated to all market participants simultaneously. Exchanges currently disseminate prices and transaction data to the SEC-sanctioned distributor for all investors, but exchanges may also send this information directly to private subscribers. While the data leave the exchange simultaneously, the public data are delayed because they go through the intermediary's processing infrastructure. The public aggregator should release information to all market participants at the same time.

Removing the possibility of differentiated channels for market data also reduces incentives that favor investment in the speed of one channel over the stability and resiliency of another. Instability creates and compounds market disruptions. Stable and accurate market data is one of the most important elements of market safety; it is the backbone of the market that must weather the most extreme periods.

• Fourth: Give clearing members more tools to limit risk. A central clearing house with strong operational and financial integrity can reduce credit risk, increase liquidity and enhance transparency through enforced margin requirements and verified and recorded trades. But because clearing members extend credit, the associated risks must be recognized. Tools like pre-trade credit checks and being able to monitor positions and credit on an intraday basis are essential. Clearing firms use various tools like margin and capital adequacy to manage their risk, but exchanges should also provide uniform mechanisms for clearers to set credit limits and to revoke a client's ability to trade immediately upon request, when necessary.

U.S. markets today are the deepest, most liquid in the world and serve an indispensable role in allocating capital. That means the companies that have the greatest potential to innovate and grow will get the capital they need to create jobs, build new industries and ensure a vibrant economy. Investors have benefited significantly from technology and innovation, but the speed and complexity at which our markets operate aren't being matched with the operational and control environment to support them.

Mr. Cohn is president and chief operating officer of Goldman Sachs