## Saturday, 16 July 2016

### Funny IEX response to Matt Levine's DPEG note

Yesterday, Matt Levine on Bloomberg view noted the following:
 Matt Levine's Money Stuff, Bloomberg View, July 14 2016 (click image to enlarge)
It's a strange argument from IEX. Hey, we do it faster which prevents competition, so we're not competing. Otherwise brokers would have to do that functionality all by themselves. You know, that stuff they currently sell to their clients. No, we're not competing with brokers. We're here to help. Honest. By the way, we charge more for this order type.

Worth a chuckle.

I doubt too many brokers or traders who properly understand DPEG would criticize the order type too loudly. That would be altruistic. A sophisticated broker, or trader, will simply use the informational advantage obtained from diagnosing the benefits from this order type for their own gain. There are many widely held trading quasi-secrets not found in any book.

It reminds me of "bug" meetings I had as an HFT regarding vendors' software "features". It would usually be a discussion that went something like this:
If we don't report this
a) can we work around it; and,  b) can we take advantage of this piece of knowledge for our own benefit;
or,  c) should we just report it so our competitors also benefit?
A vendor's option pricing issues were gold.

Knowledgeable HFTs can be good customers to have, but sometimes they're just silent.

I'm certainly against order complexity creeping into the system. Over a hundred order types in the NMS is just stupidly self-inflicted insanity. On the other hand, a lack of innovation would also be unwise. Complex orders usually exist to replace broker or trader functionality, otherwise we'd all just be using simple limit orders. They all make sense at the time.

IEX promised simple order types and failed to deliver. However, the pendulum had swung too far towards complexity well before IEX introduced DPEG and broke a core promise. IEX are not the cause, even if they are making it a little worse. Reg NMS is the culprit.

This infectious order complexity disease is all just a matter of balance gone wrong. As usual, the resulting unintended consequences have their roots in well meaning intentions. We all have to be careful of what we wish for.

--Matt.

### Solarflare (good guys) versus Exablaze (bad guys) - court update II

Just a short (updated) note to note a notable note in the noteworthy SolarFlare v Exablaze case.

 Exablaze caught stealing
SolarFlare have updated their pleadings; going from 29 pages to 41 pages. The main addition concerns two new patent accusations based around these:
US 9003053 B2Message acceleration [pdf]
US 8612536 B2:  User-level stack [pdf]
Here are links to my previous case notes:
April 14: Solarflare is suing Exablaze for patent infringement
May 7: Solarflare versus Exablaze / Zomojo complaint update
I've always been upfront that I view Exablaze as a quasi-criminal organisation worthy of scorn and disrespect, but don't let my objective ambivalence get in the way of a good story.

--Matt.

## Wednesday, 13 July 2016

### IEX Discretionary Peg (DPEG) calculation and patent

NYSE's move back in March () to essentially duplicate IEX's DPEG, with few differences is an interesting move. It also begs the question of what does IEX's patent application cover and what are the chances of it being granted?

I didn't start to write this for that reason. I've had some correspondence around the DPEG crumbling quote formula and just wanted to share how you can derive that formula yourself.

Firstly, here is IEX's DPEG formula:

Now, it's easy to get a feel for what this is doing. If the DPEG is a buy order and the market's protected bid quote volume is large, then N is big. The QIF formula will useresulting in one over a big number, which will result in a near zero, or low, number. It will be less than 0.32, IEX's quote instability threshold. That is, lots of volume on your side of the market means the market is stable and not in a position that indicates a crumbling quote. Quite natural. All the other features detract from this stability to some degree as their weights are the opposite of the near side weight at time now. Though remember, now is 350 microseconds into the future, as per the use of non-speed bumped data in a speed bumped exchange.

Let's look at the quashing function:

This is a normal kind of sigmoid such as those which were popular in old style perceptrons and neural networks. Deep nets simplify this, but I digress. The sigmoid keeps the values between 0 and 1 and is easily differentiable which has some advantages.

This is a common form that is also used in a logistic regression. Here is the usual logistic regression formula.

You may now understand how IEX might derive those values. You would do a logistic regression over all the candidate stock data using your favourite stats tool, such as R. This will spit out your constants, or weights, that give you the desired probability, or certainty, of your crumbling quote target. Naturally there will be errors in the formula's prediction but it looks pretty conservative from where I'm sitting.

You can now imagine that you could dream up other factors, and timeframes, that may, perhaps, give a better predictor. You can also imagine something better than a logistic regression might provide you with superior predictions. Also, a sensible person will realise that all stocks don't behave the same. Critically, liquid and illiquid stocks will behave quite differently.

These simple facts mean a few things. Firstly, an exchange that copies IEX's DPEG could tune things differently if they try by simply adjusting the parameters, targets, and time frames a little. Secondly, you could have different parameter sets for different stocks or stock types, or even have different parameterisations for each stock. This sounds complex, but investors are already facing a black box so does it really matter if that transparent black box is more complicated, right? In that vein, it also opens the door to simply using much better predictors, or even machine learnt black boxes, such as support vector machines, random forests, or, deep neural nets, as an alternative to the simple logistic regression. You could even just use a simple heuristic formula. Unsurprisingly, this is covering the same territory a broker's algo or an HFT would consider to avoid adverse selection.

For an exchange to do such an order type, the first step might be to do what NYSE has done and just copy the same parameters. That should make the approval easy with the SEC, as it has already approved IEX's DPEG. Then an extension argument for a different model or parameters may be incrementally argued. That would likely be a compelling argument as you're trying to aid your customers with better behaviours. The complexity starts to get messier, but the genie is already out of the bottle with the base DPEG.

Market structure, thanks to complex order types, is about to get crazier.

### IEX Patents

The other interesting consideration is the patent situation with IEX. It has been well publicised that IEX has a patent application in for their DPEG. If a party willfully violates a patent they could be facing triple damages. That is a bit of a gamble on NYSE's part as they must be confident that their implementation doesn't conflict with the patent or that the patent would not be granted. IEX's mechanism doesn't seem a particularly novel mechanism, unless you feel the combination of a normal predictor with a public ATS or exchange is a unique combination of utility and thus protected.

Here is the IEX Group Inc patent for reference:
US20160055581A1: Dynamic Peg Orders in an Electronic Trading System [pdf]
This is the primary claim:

If I was an existing exchange, I'd introduce a DPEG style, PEG with limit with a self styled adverse selection avoidance metric. There is a good chance you will not have to chance your arm against the IEX patent that way if it is carefully designed.

For completeness, here are some other IEX patents or patent applications:
US20150081508A1: Techniques for facilitating electronic trading [pdf]
US20150073967A1: Transmission latency leveling apparatuses, methods and systems [pdf]
US20160078537A1: System and method for facilitation cross orders [pdf]
US20160078538A1: System and method for a semi-lit market [pdf]
US20150302441A1: Systems and methods for providing up-to-date information for transactions [pdf]
US20150261625A1: Techniques for message retransmission mechanism [pdf]
US20150261614A1: Systems and Methods for Data Synchronization and Failover Management [pdf]
Patents. Complexity. All good for HFTs paying attention. Not so great for the average trader.

--Matt.
_______________________
PS: This blog was linked to by FT Alphaville, "Dark liquidity, lit formulas and IEX: A primer on paranoia", Alexandra Scaggs. It's now a circular reference, so don't load this up in a spreadsheet ;-)
Referred to from TabbForum.com/news your essential daily goto.
Matt Levine on Bloomberg View considering deep neural nets too.

## Tuesday, 12 July 2016

### MetaMux 48 - world's fastest 10G switch

Metamako's MetaMux 48 is an interesting FPGA based switch. It's currently the world's fastest way for getting two packets from separate sources out to one destination. This is useful for hooking up a few servers to an exchange.

~69ns is the new time to beat.

The timestamping and layer one 5ns matrix switching is more than handy. This beast is a bit of a departure for Metamako, as it's their first Altera based switch. This nice toy uses an Arria 10 in addition to the Intel x86-64 processor.

One of the best tricks you could do, for a layer 3 or layer 2 exchange, would be to set it up for muxing to the exchange for just over 69ns out and then use layer 1 for a 5ns return. This gives:
< 40ns average one way latency.
Nice. The cute layer one matrix switch allows you to set up a variety of internal packet switching components to hook them up to ports as suits you best. Very cool.

I know of no faster switch at 10G Ethernet, so it would be the world's fastest switch for now.

Let me know if I'm wrong. I used to work with some of the team a long time ago and they are good people who deserve their ever improving success.

--Matt.

_____________
PS:  I suspect Xilinx Ultrascale+, not plain Ultrascale, may be slightly quicker if someone can do the same but it's also about technique and not just tech. My expectations for latency, all other things being equal, are Xilinx Ultrascale+ < Altera 10 series < Ultrascale.

Updated in 2017 to include the new 69ns latency

## Monday, 11 July 2016

### Finra ATS stats - today's release for 20 June 2016

UBS remains #1. CS & IEX continue to battle closely for #2 and #3 respectively.
 OTC Transparency data is provided via http://www.finra.org/industry/OTC-Transparency and is copyrighted by FINRA 2016(click to enlarge)
 ATS % share Volume Avg trade size [1] UBSA UBS ATS 15.6% 572,186,814 171 [2] CROS CROSSFINDER 12.2% 447,045,603 195 [3] IEXG IEX 12.2% 446,504,952 211 [4] DBAX SUPERX 7.1% 260,424,550 198 [5] MSPL MS POOL (ATS-4) 6.0% 218,969,660 253 [6] EBXL LEVEL ATS 5.3% 192,547,100 187 [7] LATS BARCLAYS ATS ("LX") 5.2% 191,497,133 185 [8] JPMX JPM-X 5.0% 183,785,866 240 [9] MLIX INSTINCT X 4.5% 166,321,580 228 [10] SGMA SIGMA X 4.3% 156,578,423 201 [11] ICBX INSTINET CONTINUOUS BLOCK CROSSING SYSTEM (CBX) 3.6% 130,946,469 220 [12] BIDS BIDS TRADING 3.1% 115,008,137 616 [13] ITGP POSIT 2.1% 76,584,700 272 [14] KCGM KCG MATCHIT 2.0% 74,794,983 159 [15] XSTM CROSSSTREAM 1.7% 60,731,976 369 [16] DLTA DEALERWEB 1.5% 54,629,560 401,688 [17] NYFX MILLENNIUM 1.3% 46,114,138 303 [18] MSTX MS TRAJECTORY CROSS (ATS-1) 1.2% 43,733,900 194 [19] PDQX PDQ ATS 1.0% 35,466,279 194 [20] LQNT LIQUIDNET ATS 0.9% 32,964,700 45,406 [21] BLKX BLOCKCROSS 0.8% 30,543,945 12,011 [22] CXCX CITI CROSS 0.8% 27,977,100 218 [23] IATS IBKR ATS 0.7% 25,500,514 292 [24] LTPL LIGHT POOL 0.6% 20,226,118 174 [25] LQNA LIQUIDNET H2O 0.4% 13,862,200 9,640 [26] BTBK TRADEBOOK 0.3% 10,172,557 284 [27] XIST INSTINET CROSSING 0.3% 10,007,475 4,156 [28] LMNX LUMINEX TRADING & ANALYTICS LLC 0.2% 5,705,740 28,817 [29] LQFI LIQUIFI 0.1% 3,766,608 20,142 [30] MSRP MS RETAIL POOL (ATS-6) 0.1% 2,656,310 188 [31] AQUA AQUA 0.0% 911,900 12,323 [32] WDNX XE 0.0% 578,457 720 [33] RCSL RIVERCROSS 0.0% 335,475 208 [34] BCDX BARCLAYS DIRECTEX 0.0% 62,500 31,250 [35] USTK USTOCKTRADE SECURITIES, INC. 0.0% 46,003 117

### Show me the money: Minor parties in the Australian 2016 election

Pauline Hanson's One Nation is likely to receive $1.713 million from the taxpayer due to the success of the party's campaign. This may be around$1.216 million in the Senate and $0.498 million from the local electorates. How does this work? The rules are simple. If you get over 4% of the first preferences, or primary votes, in a State's Senate election or in your local electorate then you get$2.62784 per vote. If you get 3.9%, you get $0. The election count is not finished but if we look at extrapolations based on the current primary shares we get the figures presented in this article. Things may well change a bit when counting is complete, however the various counts are typically over 75% complete, all are over 60% complete, so not too much should change. I saw the SMH reporting$1.2 million for One Nation in today's paper. That looked a little low to me so I decided to calculate it from the ABC's electoral figures currently available on their website, as at just a few minutes ago.  Yeah, can't sleep.  True enough, the figure should be over $1.7M and I'm not sure how the SMH is so different as they also counted the NSW Senate for One Nation. At 4.13% NSW Senate funding for One Nation is touch and go, but more likely go than no. Another thing I find disturbing is the idea that the Christian Dems, CDP, has run out-of-state candidates in various states. The SA and Tas CDP Senate candidates both live in NSW. Fred Nile's wife ran in Tasmania and their SA candidate runs a financial business in Sydney. This seems an abuse. It comes about because parties have low barriers to entry when running on a Senate ticket. If you are an individual running for the Senate then you need to jump through some hoops. Not so for a recognised party. Reform is needed. The CDP's effort to get some money out of the Senate failed as they didn't quite reach a 4% threshold in any state. However, they had better luck in the House of Reps with$318,164 predicted to cough up into the CDP coffers.

If we look at the Senate, Labor should receive $11.8M and the LNP coalition around$13.8M. A bit more than the Green's Senate take of $3.3M. It seems a better approach than the US system of private only funding but it doesn't quite feel value for money, all the same. It is interesting to note that NXT did well in SA in both the Senate and the House of Reps. However, thanks to the larger population in Victoria, Derryn Hinch's Justice Party almost out earnt them in Senate earnings with the Senate figures estimated to be$589,782 for Derryn and $642,871 for Nick. Nick races ahead in the House of Reps with Derryn only picking up$15,227. At least Derryn pushes over the $600k mark. Poor old Jacqui Lambie suffers the Tasmanian curse of low population. She is due to receive only$79,325 from quite a huge 8.47% vote. She may have to ask Derryn for a loan from his 5.98% take.

Not many parties make the threshold in the Senate. However, two others are likely to get funding. I've previously talked about how crazy NT is. Well proof is that the Marijuana (HEMP) Party / Australian Sex Party is tracking for 4.7% vote which is nowhere near enough for one of the two seats, but it will earn $15,395. Let's hope that doesn't go up in smoke. Boom. Tish. Rise Up Australia Party, which is not related to the Sex Party, is tracking 6.64% in the NT and is due to receive$21,757 if they can keep it up. In the ACT, the Sex Party is right on the threshold of 4% and may, or may not, receive $28,960 for their trouble. I've compiled a little table of parties, excluding LNP, Labor, Green, all single independents, and NXT for the House of Reps. #### House of Reps - Minor Parties  Animal Justice 37,012 Aus Christians 23,609 Bullet Train 16,652 Christian Dems 318,164 Derryn Hinch Justice 15,227 Family First 242,402 Katter's Aus 175,381 Lazarus Team 23,234 Liberal Dems 29,158 Liberty Alliance 17,344 One Nation 497,521 Recreational Fishers 31,607 Rise Up Aus 64,660 Shooters Fishers 21,191 Total Result $$1,513,165 Bob Katter picks up a few dollars beyond his seat. Katter is the only party in that list to actually win a seat. Christian Dems and Family First win some. Rise Up gets a little to add to their Senate takings from the NT. Reform is needed. The 4% threshold for the Senate should be perhaps raised to a whole Senate quota or a percentage of one so that the ACT and NT are treated fairly. Minor parties, such as the CDP, should not be able to parachute out of town candidates into Senate or House of Rep seats in their hunger for funds. There needs to be an honest barrier to entry to stop that kind of ridiculous behaviour. The 4% threshold for the House of Reps ticket seems too low but I've not thought too deeply about what would be reasonable. Any ideas? I would also like to see a proper accounting of funds spent. If you don't spend it, you shouldn't keep it. The major parties would certainly spend more than they receive you'd be inclined to think. The Rob Oakshott's and Christian Dems should not be able to use the election as a fund raiser. --Matt. PS: Why is there one electorate starting with the letter T and ten starting with the letter W. I was not expecting that... ## Sunday, 10 July 2016 ### Mediscare - lay legal thoughts on the SMS I thought I'd meander through some of the outcry against the so called Mediscare SMS campaign.  Mediscare SMS - (click to enlarge) The executive summary is a political lie is not a legal problem, but impersonating Medicare is likely to be an offence. The penalties for such offences may included up to 5 years gaol for perpetrators and potentially fines in the hundreds of millions of dollars if each message is considered a violation. High stakes indeed. Let's meander through. Firstly, there is the lie that the Labor party peddled that the coalition would privatise Medicare. Perhaps this lie is more shameful, especially for Bob Hawke, than the 100 roast saga peddled previously by the Liberal coalition. However, let's be clear, both sides of politics have a history of lying to, or misleading, the electorate. Electoral discontent lives upon fertile ground. Secondly, there is the Mediscare text campaign that had a misleading text, purporting to be from Medicare, warning that a vote for the coalition would end up being the death knell for Medicare. It appears this SMS campaign was thrown out around 10:41am to 11:11am which suspiciously looks like it was just after the 10:30am polling Labor ran. Planned or panic?  (click to enlarge) Here are some of examples of the text messages received by the public. Queensland Labor has admitted responsibility for some of them.  (click to enlarge) Let's address the first point first. Is it OK for a party to mislead or lie? The short legal answer is, "Yes." There used to be legislation making it an offence to mislead but that has long been removed from the statute books1. Leanne Griffiths wrote in JCU Law Review2, "Although Australian law does not have an express guarantee of free speech, 3 the High Court has acknowledged in various decisions4 that an implied freedom of communication exists under the Constitution in relation to political and government matters." George Williams wrote a nice history on, "Truth in Political Advertising Legislation in Australia"5 back in 1996-97. Here is a relevant extract if you want a bit more detail: #### The History of Truth in Political Advertising Legislation in Australia It was not until the passing of the Commonwealth Electoral Legislation Amendment Act 1983 (Cth) that the first provision prohibiting untrue advertising was enacted. The new section 116(2) [subsequently section 329(2)] of the Commonwealth Electoral Act 1918 (Cth) stated: A person shall not, during the relevant period in relation to an election under this Act, print, publish, or distribute, or cause, permit or authorise to be printed, published or distributed, any electoral advertisement containing a statement: 1. that is untrue; and 2. that is, or is likely to be, misleading or deceptive. Section 116(6) provided that it was a defence if the person was able to prove that he or she 'did not know, and could not reasonably be expected to have known' that the electoral advertisement contained an offending statement. A person convicted of an offence under the provision was liable to a fine not exceeding 1 000 or imprisonment of up to 6 months or both, while a corporation would be liable to a fine of up to 5 000. Section 329(2) was repealed in 1984 upon the recommendation of the Commonwealth Parliament's Joint Select Committee on Electoral Reform. A majority of the Committee expressed the following criticisms of the section: 1. While fair political advertising is a legitimate objective, it is not one properly to be sought through legislation. Political advertising involves 'intangibles, ideas, policies and images' which cannot be subjected to a test of truth, truth itself being inherently difficult to define. 2. As evidence was given that even predictions and opinions may imply statements as to present fact, and thus be subject to the section, the section was considered to be so broad as to be unworkable. 3. The section would have a disproportionate impact on publishers, who would need to seek legal advice before publishing. This would inhibit political advertising and thus limit the information received by the public. 4. The Committee expressed concern that injunctions might be misused to disrupt the campaigns of other parties and candidates. In the context of an election campaign the grant of an interim injunction could have the same effect as a final order. Consequently, the final recommendation of the Committee was as follows: the Committee concludes that even though fair advertising is desirable it is not possible to control political advertising by legislation. As a result, the Committee concludes that s 329(2) [161(2)] should be repealed. In its present broad scope the section is unworkable and any amendments to it would be either ineffective, or would reduce its scope to such an extent that it would not prevent dishonest advertising. The safest course, which the committee recommends, is to repeal the section effectively leaving the decision as to whether political advertising is true or false to the electors and to the law of defamation. A similar view was repeated in 1994 by the Joint Standing Committee on Electoral Matters in its Report of Inquiry into the Conduct of the 1993 Federal Election and Matters Related Thereto. ### Subsection 329(1) There is a section of the Electoral Act, subsection 329(1), which makes it an offence to have misleading or deceptive electoral advertisements. This is often misinterpreted as "you can't lie", but this is not the case. This subsection does not regulate the content of political messages but rather goes to influencing a voter to mark the ballot paper incorrectly, which might include turning up at the wrong time or day. This has been adjudicated upon by the High Court in Evans v Crichton Browne (1981) 147 CLR 169, the leading case. This High Court decision was also considered in the context of the 2010 election in the cases of Faulkner v Elliott [2010] FCA 884 and Peebles v Honourable Tony Burke [2010] FCA 838, and most recently in the decision of the South Australian Supreme Court in Holmdahl v Australian Electoral Commission (No 2) [2012] SASCFC 110. At paragraph 10 of the decision in the Peebles v Honourable Tony Burke case the Court stated that: It is clear from reading the entire reasons for judgment of the High Court in Crichton-Brown that the prohibition in s 329 concerns misleading or deceptive conduct which might affect the process of casting a vote rather than the formation of the political judgment about how the vote will be cast. That is, the section concerns conduct which might, for example, lead a voter either to fail to record a valid vote or to record a valid vote but not for the candidate or candidates of the voter’s choice. An obvious example would be information which told a voter how to go about completing the ballot paper which was wrong and would result in the casting of an informal vote. So, there doesn't have to be truth in advertising for political parties due to the implied freedom of political communication. However, you may have a recourse in common law or via defamation. Defamation could be an open avenue, but it would be a difficult road given: the implied freedom; the fact that defamation law is diabolical; and, legal entities with ten or more employees, such as the Liberal Party, cannot sue for defamation. Perhaps Malcolm Turnbull, or any aggrieved candidate for a seat, can sue for defamation? The High Court Lange case suggests a political defamation case may indeed work against untruths if you cannot prove reasonableness6. That is, you could be in trouble for your lie if you cannot show: • You had reasonable grounds for believing it was true, • You took proper steps to check the accuracy of the material, • Where practicable, you sought a response from the person defamed. In summary, whilst you have to be careful with respect to defamation, you can pretty much say anything you want about another candidate. If you want to say the Liberal Party is a fascist party that cuts off babies' heads in initiation rituals, you pretty much can by hiding under the skirt of implied political freedom of speech. ### Limits on political advertising This is not where it ends though. You can clearly see from the texts that they are misleading. ### Misleading It is interesting to consider what is meant by misleading. Does the sender have to intend that is misleading for it to be misleading? Well, the normal standard is, "No." It is similar to strict liability in that it only matters how it is interpreted, or what actually happened, not the intention. The best definitions in this regard are probably contained in the Competition and Consumer Act 2010 which is discussed here7: Schedule 2 of the Australian Consumer Law deals with misleading or deceptive conduct. It covers unconscionable conduct, unfair practices, conditions and warranties, product safety and information, liability of manufacturers for goods with safety defects offences, country of origin representations. The law is in place to protect consumers from being misled about the products and services they buy. Businesses are not allowed to make statements that are incorrect or likely to create a false impression. This applies to their advertising, their product packaging, and any information provided by their staff or online shopping services. It also applies to any statements made by businesses in the media or online, such as testimonials on their websites or social media pages. It makes no difference whether the business intended to mislead a consumer or not. If the overall impression left by a business’s advertisement, promotion, quotation, statement or other representation creates a misleading impression in a consumer’s mind—such as to the price, value or the quality of any goods and services—then the behaviour is likely to breach the law. A possible defence to an offence that one might try would be that "we didn't mean it to be misleading", or the "oops" defence. I'd imagine the Labor Party may attempt to claim they didn't mean it to look like it came from Medicare. That is not the appropriate standard and such a defence does not hold muster with the normal approach to "misleading". Clearly voters were misled as some have expressed regret in changing their vote to Labor based solely on that text message. ### Lying about the source The main issue I think that would truly cause Labor trouble is that the source of the message is deceptive. There are a number of gnarly problems with this. Firstly, Section 328 of the Commonwealth Electoral Act 1918 requires that notices must require the usual source for the authorization of the advertisement. Some Labor SMS messages contained links to web sites that may have provided such authority, but the Mediscare SMS certainly didn't. Section 328A covers similar ground for Internet advertisements. Also, Section 351 deals with announcing or publishing on behalf of "any association, league, organization or other body of persons" where the publisher doesn't have authority in writing from the organization. It seems the Mediscare SMS is a clear violation of this Law. ### Bankruptcy Both of these offences carry fines of up to 1,000 for an individual or 5,000 for a body corporate. Small beer? Perhaps not. Each message was individually sent by a computer somewhere. Each message could be subject to a 5,000 fine. This would be 500,000,000 per 100,000 messages sent. Extra weight to the messages being an individual item, rather than a broadcast, is that the election day is within the broadcast blackout period of three days prior to the election that has existed since 1942. Also suggestive of individual messages, are the various time stamps recorded, 10:41, 10:52, 11:03,11:11, et cetera, on voters phones. Messages spread over a period are unlike a broadcast and individually targeted. That is a strong argument for each message being a separate violation. Now that amount of money would probably bankrupt the organization sending the message. If you sent 1 million messages you could be up for a fine of 5,000,000,000. Yep, billions. Would this be reasonable? I'd say such a fine would be reasonable as you'd have to value having control of the government of Australia at something considerably more than that. It is beyond argument that the Mediscare SMS made a difference in this election. ### Gaol time for the crime  Mediscare SMS - (click to enlarge) It is an offence to lie to Commonwealth Officer under the Crimes Act but you couldn't really argue Labor was sending this text to a Commonwealth Officer in their official capacity, but perhaps such an official received such a text on a work number? It is also a criminal offence to impersonate a Commonwealth public official. The Mediscare SMS 8 clearly violates this standard. The penalty for this is imprisonment for 5 years. That's pretty serious, so let's look at the detail in the Criminal Code Act 1995: Division 148 -- Impersonation of Commonwealth public officials 148.1 Impersonation of an official by a non-official (1) A person other than a Commonwealth public official commits an offence if: (a) on a particular occasion, the person impersonates another person in that other person's capacity as a Commonwealth public official; and (b) the first-mentioned person does so knowing it to be in circumstances when the official is likely to be on duty; and (c) the first-mentioned person does so with intent to deceive. Penalty: Imprisonment for 2 years. (2) A person other than a Commonwealth public official commits an offence if: (a) the person falsely represents himself or herself to be a Commonwealth public official in a particular capacity; and (b) the person does so in the course of doing an act, or attending a place, in the assumed capacity of such an official. Penalty: Imprisonment for 2 years. (2A) For the purposes of subsection (2), it is immaterial whether that capacity as a Commonwealth public official exists or is fictitious. (3) A person other than a Commonwealth public official commits an offence if: (a) the person: (i) impersonates another person in that other person's capacity as a Commonwealth public official; or (ii) falsely represents himself or herself to be a Commonwealth public official in a particular capacity; and (b) the first-mentioned person does so with the intention of: (i) obtaining a gain; or (ii) causing a loss; or (iii) influencing the exercise of a public duty or function; and (c) if subparagraph (a)(i) applies--the first-mentioned person also does so with intent to deceive. Penalty: Imprisonment for 5 years. (3A) For the purposes of subparagraph (3)(a)(ii), it is immaterial whether that capacity as a Commonwealth public official exists or is fictitious. (4) The definition of duty in section 130.1 does not apply to this section. (5) To avoid doubt, for the purposes of this section: (a) impersonation does not include conduct engaged in solely for satirical purposes; and (b) false representation does not include conduct engaged in solely for satirical purposes. This looks a hard one to wriggle out of as you have committed an offence even if the official does not exist or is fictitious. That is, you can't claim to represent a Commonwealth official even if such an official doesn't exist. A Commonwealth Medicare spokesperson may or may not exist. It doesn't matter. It just matters that you misled someone to think a Commonwealth Medicare spokesperson existed. It would seem reasonable, considering the gravity, that someone should be going to gaol for this. ### Conclusion Offences have occurred. The penalties could be millions of dollars of fines for Labor and gaol time for particular individuals. It would seem reasonable that such a serious betrayal of trust and interference in the electoral process is considered by the courts with the seriousness it deserves. Regretfully, it is hard to have much confidence in the courts, especially given the partisan nature of appointments to both the Federal Court and the High Court. It may be a good test of the courts' independence. --Matt. 1. AEC website, "Although the Act previously contained a prohibition on 'untrue' advertising (see former subsection 161 (2)), this was repealed in 1984. Subsequent JSCEM reports have made various recommendations about reinstating it. Successive governments have not supported these recommendations." 2. Leanne Griffiths, The Implied Freedom of Political Communication: The state of the law post Coleman and Mulholland, 12JCULR pp93-111 3. Coleman v Power (2004) 209 ALR 182, 232 (Kirby J)] 4. Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 (‘Nationwide News’); Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106 (‘ACTV’); Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 (‘Theophanous’); Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211; Lange v Australian Broadcasting Corporation (1997) 145 ALR 96, 112; Coleman v Power (2004) 209 ALR 182, 232-3 (Kirby J) 5. George Williams, "Truth in Political Advertising Legislation in Australia", Australian Parliamentary Library, Research Paper 13, 1996-97 6. Defamation in Australia 7. AdStandards.com.au ACCC role 8. CRIMINAL CODE ACT 1995 ## Wednesday, 6 July 2016 ### Drones - a firefighting solution There are currently some difficult stories about drones interfering with fire fighting flight paths. That is bad. However, just may be, drones are the solution? Here is a picture of a Bombardier 415 Superscooper. It costs CAD 37 million and carries a bit over 6,000 litres of water. The question is, for sites with appropriate flight times, what about 6,006 drones, 78 x 77 in a flock, each delivering 2 litres of water simultaneously? Well, back in 2014 Professor D'Andrea wrote about the feasibility of drone delivery for 2kg packages in the context of 30 km/h head winds and estimated a bulk price of about 1,000 for a drone. So, perhaps it is possible to have twice the water capacity at one fifth of the price. A nice order of magnitude improvement. Quite the interesting sensor and software challenge to coordinate such flocks. Could be fun for you. Now you have a good excuse ;-) --Matt. PS: Would renting 100 cheap brick laying robots, or drones, be more effective than one big beast? ### Australian Senate elections 2016 - informal votes  A previous, 2013, NSW Senate Ballot Paper/Tablecloth A larger informal vote this year as was expected due to the voting rule changes. It is worth noting safety provisions would make a previous formal vote still valid at this election. That is, a single '1' or check above the line would be OK, though limiting. The small Tasmanian Senate paper was over 80cm in width with only 58 candidates. The NSW Senate ballot paper had 151 candidates for election to the same number of seats. Senate ballot papers are often referred to as "tablecloths" for obvious reasons. I thought it would be interesting to model the informal vote against the number of candidates. The most obvious feature was that the Northern Territory does something weird on election days. You can develop your own theories as to why after reading a few Top End front pages.  Informal voting correlates well to number of candidates (click to enlarge) The counting has progressed in the 2016 Australian Senate election to be between 50 and 75 percent complete. My guess would be that the informal error may be correlated to the log of the number of candidates. If you exclude the zany NT result, you get a R^2 of 93% for a log model. Interesting, though the flexibility of such a model, combined with excluding a data point, means you may really fit to anything, if you try hard enough. Interesting nevertheless. There needs to be work on creating barriers to entry for candidates, especially for out of state parties throwing up non-resident candidates. That is simply ridiculous and a good place for reform to start. Yes, I'm talking to you Reverend Fred Nile from NSW nominating both your wife for the Tasmanian ballot, and Matt Attia, who also lives in NSW, for SA. CDP$$$ grab?

Remember you need "a[t] least 4% of the formal first preference votes" to get your \$2.62784 per vote in the Senate or as a local candidate. That should make you feel ill when you think about Pauline Hanson's One Nation.

The new reforms were a good start in empowering the voter, but further work needs to be done to cleanse democracy a little more.

--Matt.

## Tuesday, 5 July 2016

### Maths education - counting on fingers & making mistakes, with attitude, are important

Growth mindset, making mistakes, counting on fingers, et cetera. The science of math education is largely ignored even though many teachers understand it well enough. Breaking the old system is hard.

Stanford mathematics education professor Jo Boaler needs more uptake:

(c/- Dr Megan Vazey)

Educators, parents, and students should be, need to be, jumping on this bus. More importantly, administrators need to reorient their thinking. Share if you can.

--Matt.