How Did Thomas Peterffy Automate Trades With Metal Fingers?

David Senra says Thomas Peterffy automated trades with metal fingers after Nasdaq ordered every trade to be typed on a keyboard. Peterffy and his team worked every night for a week, mounted a camera above the terminal screen to read prices, and hung a frame of metal arms and tiny motors over the keys. When the computer spotted a trade, signals fired and the fingers typed like a mechanical spider.

The Nasdaq employee came back to an office full of violent automated typing. Buy and sell orders hit the keys in bursts, faster than any human could think or type. He watched in silence and left without a word. Peterffy offered to install a mannequin operator with moving arms. The system survived a $3 million loss when a drafty door triggered phantom trades on a backup device. Timber Hill made $25 million that year and $50 million the following year.

In the 80s the market-making network stretched from New York to Chicago to San Francisco, then overseas to Frankfurt, London, and Hong Kong. Goldman Sachs made repeated acquisition offers that climbed as high as $900 million. Peterffy turned them down and, pressed for his price, said $3 billion.