SEC Proposes Wall Street Transparency Via Python 278
An anonymous reader writes "A US federal agency is considering the use of computing languages to specify legal requirements. 'We are proposing that the computer program be filed on EDGAR in the form of downloadable source code in Python. ... Under the proposed requirement, the filed source code, when downloaded and run by an investor, must provide the user with the ability to programmatically input the user's own assumptions regarding the future performance and cash flows from the pool assets, including but not limited to assumptions about future interest rates, default rates, prepayment speeds, loss-given-default rates, and any other necessary assumptions.' Does this move make sense? If the proposed rule is enacted, it certainly will bring attention to Python or other permitted languages. Will that be a good thing?"
The above quotes were pulled from pages 205 and 210 of the dense, 667-page proposal document (PDF). Market expert and professor of finance Jayanth R. Varma says it's a good idea.
Fantastic! (Score:5, Interesting)
This would be a fantastic idea. Not only would the rules be transparent and non-ambiguous, but the potential for experimentation and self-analysis would be incredible. Python is definitely one of the better languages to use for this, as it tends to be very readable and self-explanatory as far as programming languages go.
hmm (Score:4, Interesting)
Maybe if the languages accepted are functional, and therefore logically provable without side-effects.
its a step in the right direction (Score:3, Interesting)
This proves that... (Score:4, Interesting)
downloaded and run by an investor, must provide the user with the ability to programmatically input the user's own assumptions regarding the future performance and cash flows from the pool assets, including but not limited to assumptions about future interest rates, default rates, prepayment speeds, loss-given-default rates, and any other necessary assumptions.'
...it is forbidden to have a straightforward sentence with less than two conjunctions.
Filing Agents (Score:4, Interesting)
Something that needs to be considered is the existence of so called "Filing Agents". I work for such a business.
Right now, the SEC requires companies to file documents in a specific subset of HTML, as well as (in some cases) XBRL, which is an XML-based reporting language. In some rare cases, documents are another type of XML, or even specially formatted ASCII documents (ugh).
Securities lawyers and company administrators don't want to understand the highly technical processes involved, so they outsource their technical reporting requirements to filing agents. We take care of all the nitpicky details that they don't want to consider. Looks like we'll have to learn Python as well. We've been meaning to graduate from Perl anyway, so no big deal. :-)
Use JavaScript not Python. (Score:2, Interesting)
ECMAScript or JavaScript would be a much better language to make this requirement for. Python would be a mistake. JavaScript is a much more limited language in terms of dialect and concepts and is much more neutral than Python is; yet JavaScript can express nearly any level of complexity. It is also readable by majority of the programming world. It is also an excellent data transport language. Python is not readable by the majority of the programming world. It is also terrible as data transport language.
JavaScript is about as neutral a language as you'd be able to find. Plus it is ubiquitous and public financial calculations and records could readily be used in straight HTML/JavaScript webpages - no plugins or server code necessary.
Is nobody else flashing back (Score:5, Interesting)
Huh- why? (Score:4, Interesting)
So rather than actually explain what the item is, they'll just build a model of what it is, and let you put in your own assumptions.
So we'll create a bunch of programming overhead, and end up with huge improvements.
Namely that iInstead of descriptions nobody reads or understands, we'll have programs nobody runs or understands.
I've got an idea, I know it might sound crazy but here it goes.
If you see someone selling a great deal, but you don't quite get what they're selling, how it works, or even why it's such a great deal, DON'T BUY IT.
We could even impose this on industry, maybe make it a legal/ethical requirement that people moving around large sums of money act with due diligence or something.
If people actually stuck to this, and only bought things that they understood and made sense to them, the companies making these confusing products that nobody understands would have to make simpler more straightforward products.
These guys need to step back, and make products that THEY understand. If the designer of the product can't figure it out, it's too confusing. If none of the potential customers can understand it, it's too confusing.
Really if they currently can't implement the description, how does documenting it in python make it any better?
Re:Good idea. (Score:5, Interesting)
You say that jokingly, however, your point is rather poignant. If Wall Street types were presented with a way to transmit their methods and assumptions in a non-human readable way like a programming language, it becomes less transparent, not more. Sure investors can say "if a, b and c, then something happens in this black box and outputs x, y and z". They have no idea how their assumptions lead to the given result.
My view is that there just is no substitute for a system of social morality like those in eastern cultures of old. Modern society has the attitude that "if it's not illegal, do it". Unfortunately, the law will never be able to codify in black letters the rich spectrum of behavioral regulations imposed by morality, developed over thousands of years of human behavior. Thus, individuals conforming only to the law and ignoring ethics and morals will inevitably breach their moral duty, and the damage they do is limited only by their "creativity" in using the law and the social power they weild due to their position, wealth or influence.
In short, we need to disabuse ourselves of this trend to consider ethics and morals some hokey, freedom-fettering construct that has become obsolete. It is very much necessary, and Wall Street is a great place to look if you want an example of why.
Not without precedent (Score:3, Interesting)
Well, this is not entirely without precedent. Even the field of Physics employes this method of specifying things that are complex enough that warrant a "model" which is highly dependent on what the model chose to include or exclude. For example, in tracking satellites, you would think that you should be able to use Physics and the myriad of formulas alone to come up with the position of satellites. But because real world physics (think drag, friction, N-body G forces etc) is too hard to figure out and are often hand-waved away (thus the model), NASA had to devise a set of algorithms to communicate a way to track satellites. They then publish the telemetry at regular intervals which are then run through those algorithms to find out where any of the satellites are at any given time. Last I worked on it, I was looking at Fortran programs which was used as the spec for the algorithm. Now, think about it, how better to describe an algorithm than an actual working program?
see: SGP4 [wikipedia.org] and this [celestrak.com] in particular.
Re:Ugh! (Score:3, Interesting)
The average consumer cannot understand cell phone contracts, gym membership contracts, car lease contracts, bank account terms and conditions and a whole bag of other things. So you're saying they should abstain? Hell, I cant get a parking voucher from an underground car park these days without the back of it being covered in fine print you'd need a scanning electron microscope to read.
No sir, the answer isn't to "vote with your dollar". It's to acknowledge that the entire social system is broken and massively favors big money interests that are in a position to use the legal system to their own ends.
The fix is not some new piece of regulation you can come up with. You'll never be able to legislate around a population's total lack of ethics.
Re:Is nobody else flashing back (Score:1, Interesting)
There's an episode of Blake's 7 where a court case is decided after the prosecution and defence submit their arguments as programs. That may have been from the first episode broadcast on Mon 2 Jan 1978. In any case, it sorta reduces law to a game of CoreWars.
Re:Fantastic! (Score:3, Interesting)
Re:Fantastic! (Score:5, Interesting)
A fantastic idea ! Furthermore, have it online. Furthermore, put the data that the govt gets anyway into the forms so that they're partly pre-filled. Indeed, do what we've done in Norway for a decade.
By now it's progressed to the point where I can -literally- file my taxes from my mobile phone in 15 minutes. And it takes that long only because my investments are semi-complex (i.e. some of them are foreign so don't come pre-filled)
Oh, and yeah, it does mean you know how much taxes you owe instantly, after you fill in the forms, you press "calculate taxes", and up pops the answer, none of that file paperwork, wait months for the response.
Re:Not without precedent (Score:3, Interesting)
Now, think about it, how better to describe an algorithm than an actual working program?
Pseudo-code is far better for describing an algorithm than actual running code. If one uses "production" code to express an algorithm, then one has to also accept the limitations imposed by the language and programming environment.
For example, if the demonstration code takes into account the possibility of integer overflows, that check becomes part of the "official" algorithm. While this may be okay as long as the algorithm remains implemented in a single language/environment, it becomes a problem when one needs to implement the algorithm in another environment.
At the very least, there should be multiple sample implementations, so that one can see what features are intrinsic to the algorithm, and what features are imposed by the external programming environment.
Re:Good idea. (Score:3, Interesting)
You say that jokingly, however, your point is rather poignant. If Wall Street types were presented with a way to transmit their methods and assumptions in a non-human readable way like a programming language, it becomes less transparent, not more.
You are assuming that legalese is human-parsable, that it is a consistent language and that humans can easily spot and demonstrate errors in it. With a programming language, you can give a test case that fails and point out this precisely. You can more easily argue that a rate or a progression is not defined, or defined in a way impossible to parse. You can't sweet talk an interpreter.
Sure, it doesn't remove all dishonesty magically but it does remove the ability for some elaborate lies. It will make justing rulings easier and faster, and when it comes to bring morality somewhere, the fact that you will get caught and punished if you do a wrong is a strong factor.
Re:Ugh! (Score:2, Interesting)
And since everyone can run this program and exploit the way it calculates things this will be about as realistic as the CBO estimates ! Oh wait, the government can write bug-free programs, right ? Of course it will provide for a few cushy python hacking jobs in wall street.
This would be great for wall street ! Imagine, relatively simple AI programs automatically searching for loopholes in the law. Nothing could go wrong, right ? After all, in a government program, there will be no loopholes, right ?
And all this in the name of letting stupid people invest "safely". How about allowing wall street to take money from stupid people ? This ensuring stupid people won't make many investments at all. This will result in only the smart investors investing (those with a proven track record of good investments, as illustrated by their bank account balance). Which is of course the reason capitalism works in the first place. Sucks if you're not capable of making investments significantly smarter than average, of course.
Then simply go back to the situation before the crisis started brewing and either outlaw investing loaned money directly (which America never did), or make it de-facto impossible (which America did do), which will prevent a crash like we saw last year (and which we will see again unless Obama radically changes course). Of course, this will mean that we return to the situation that any group judged "unreliable" (unreliable as in "will probably not be extremely stable for at least 30 years") will not be able to get much of a loan at all (and because some of these groups are human, that will result in racial differences, education differences, etc). But if making reasonable assumptions about people is supposedly racist and outlawed, how can anyone but the law (ie. all of us) be blamed for the crashes this causes ?
Re:Good idea. (Score:1, Interesting)
Actually, social obligations within the empire were by law and decree very civil, cordate, considerate, and respectful. Even by modern terms. It's only on the warpath that things changed. And exceptions were mostly for enemies that resisted (twisting Ultima Thule around a bit), and camp and battlefield discipline.
Sort of like old Martial Germany. Or Japan. Everyone prim and proper and most curteous and repressed. And looking forward for the next little war let off some steam or screaming hysteria.
Oh. And, yes, he was quite a sweet-talker. Excelled at negotiations and diplomacy. And politics. Plus above-par strategist, tactician and fighter. And he refused a petition to kill all the Chinese and turn China into pasture for that crucial essential-resource : mongol horses. Better than the U.S. did, going west.
And more than 10% of northern humanity has his - personal - genes. I think it goes up to 30%, in China. More, in Mongolia.
Re:Not without precedent (Score:2, Interesting)
I despise pseudo-code. You can shamelessly hide computational complexity by using mathematical notations. Have you ever tried to code any algo expressed in pseudo-code? Eye opening experience.