10 ms·

Speed Traders Invade Sleepy Corner of England, Locals Bristle

58 points by chollida1 10y ago

krapht 10y ago
Yet another case of NIMBYism. Why does the community get to decide on what is done with private property? A radio tower mast harms nobody, will not significantly affect traffic, utilization of public utilities, or pollute. It's telling, the comment at the end. 100,000 pounds? Not enough. We need to extract more from those evil financial companies, because they can afford it. What a naked money grab.
- peatfreak 10y ago
  I can't tell if you're serious, or this is just brilliant satire.
- wlesieutre 10y ago
  > What a naked money grab. Whereas high frequency trading is what, exactly? It'd be one thing if the radio tower were needed to serve a useful purpose, but why should they be able to impose it on a community to shave a couple milliseconds off of latency so financiers can play stock market games? Maybe I'm not well educated on the issue, but is HFT not just a gigantic zero-sum arms race where the participants would all love to stop wasting money on it except they're worried that someone else would one-up them by half a millisecond?
  - walrus01 10y ago
    It is a really good question whether it is the morally correct thing for ANYONE to aid and abed HFT firms.
    - MichaelGG 10y ago
      HFT reduces spreads. End users end up benefiting from lower prices. If you wanted to make HFT less of a game, adding much higher precision would help. So instead of pricing in increments of a penny, which is a lot, try, say, 1/100,000th of a penny (8 digit precision on the price). If we accept financial services as a whole to be OK, then HFT certainly is. I'd suggest the book "Dark Pools": https://www.amazon.com/Dark-Pools-Machine-Traders-Rigging/dp/0307887189/ref=pd_sim_14_1?ie=UTF8&dpID=51DtN%2BetT1L&dpSrc=sims&preST=_AC_UL320_SR208%2C320_&psc=1&refRID=ZN3KREEXAPQ9XZVJ7D5H https://www.amazon.com/Dark-Pools-Machine-Traders-Rigging/dp... It describes how automatic trading started. If you're a programmer, you'll probably have your mouth hanging open realising how up-for-grabs so much money was. At least that's how it sounded on reading it.
      - alimw 10y ago
        > HFT reduces spreads. End users end up benefiting from lower prices. Is this really true? It's hard to understand how the fact that one guy can trade with a delay of two microseconds instead of three will benefit the market as a whole. I can tell you it is commonly thought that HFT's profits come at someone else's cost, and that someone else is precisely your "end user". See "front-running".
        MichaelGG 10y ago
        Front running is when you take your customers' orders, then use that knowledge to cheat them. For instance, your customer gives you an order to buy a stock. You then go and buy a bunch first, then sell to them at a profit. Front running has nothing to do with speed. And since HFT firms don't have customers generally, they simply cannot front run. The profits have come at the cost of other market makers - they're all HFT now. There's also the ability to adjust pricing quickly, so that when some large firm tries to buy or sell a large block, they don't get to avoid price impact as easily.
        dredmorbius 10y ago
        Front-running is precisely what Michael Lewis's Flash Boys is about. The trades intercepted by HFT don't constitute marterial market information which could change the behavior of the trader being front-run. They can only serve, much as with Sysiphus, to take an existing transaction opportunity from them, after having been committed to it.
      - matt_wulfeck 10y ago
        Sweet the spreads are reduced. Thanks HFT! I've been up all night worrying about them. Everyone profiting from HFT are trying desperately to convince everyone else that they provide a service and benefit and they just can't understand why normal folks aren't buying it. The amount of power of HFT to move markets is frightening. Like, for example bogus assassination tweet sending the stock markets plunging $136 billion in two minutes* * http://www.bloomberg.com/news/articles/2013-04-23/fake-report-erasing-136-billion-shows-market-s-fragility http://www.bloomberg.com/news/articles/2013-04-23/fake-repor...
  - pjlegato 10y ago
    This is a straw man reply. It isn't responsive to the original objection -- why should the government get to decide whether someone can build a radio tower on private property, provided that it doesn't adversely impact anyone else? The proposed use of the tower is irrelevant.
    - wlesieutre 10y ago
      I don't know what the land use laws are over there, but I can tell you that in the US, the government frequently gets to decide whether someone can build a radio tower on private property. I'm fairly certain if someone bought a plot of land near me and said "I'm building a 1000 ft. tall radio mast for stock trading" they'd be promptly told to fuck off. On the other hand, if a project is being built to provide a public benefit, say for an emergency radio system or something, then variances are more likely.
      - foota 10y ago
        I don't think that answers they question of why the government should be able to do so.
        wlesieutre 10y ago
        A more extreme example to make a point: because it would be bad if someone could buy up the house next to me, knock it down, and replace it with a sewage plant. At least in the US, a large component of limiting land use is to prevent someone from moving in with some undesirable feature and tanking an entire neighborhood's property values, which in many cases are homes that represent a large fraction of a lot of people's net worth (and retirement funds). Taken too far, this can lead to crazy NIMBYism that keeps anything from being built anywhere, but I don't think it's unreasonable to say "No, you can't put a landfill in the residential area that's been developed here for 150 years." Whether you think a 1000 ft. radio mast falls into that category is up for debate, but a full-on libertarian "I can do whatever I want wherever I want to" system wouldn't lead to very good outcomes.
        10y ago
- aaron695 10y ago
  > A radio tower mast harms nobody Visual pollution is a thing. And an important thing. Why as a well off society we don't do more about it surprises me. If for some reason noone could see the mast, your point would be 100% valid.
- PhasmaFelis 10y ago
  Note that, from the article, this is a town that gets a good chunk of its economy from tourism. (Brits love their holidays.) So something that vacation-goers consider an eyesore could, in fact, cause significant economic damage. It is kind of funny that you use "naked money grab" in defense of HFTs.
  - matt_wulfeck 10y ago
    Not only that, but a gigantic (literally) liabilty of the company that maintains the tower goes out of business.
  - deleted 10y ago
    [deleted]
- bogomipz 10y ago
  Yes, correct its not just a cell tower its 300 meters! It is not in sympathy with the scale of its surroundings. As such it constitutes a blight. It's an eyesore with no public benefit. NIMBYism isn't always a bad thing. Its easy to throw the NIMBY term around when its not your own backyard.
- tmnvix 10y ago
  There's nothing inherently wrong with NIMBYism. Would you be at all concerned if your neighbour planned to place a radio mast as tall as the eiffel tower in their backyard? The local's concerns are entirely reasonable.
mjevans 10y ago
Why aren't they building a fiber optic link? Is it that the shipping channel makes it too likely for disruption of the link?
- dahdum 10y ago
  Fiber optics are slower than microwave, and the routes aren't as straight.
  - tormeh 10y ago
    I'm being pedantic but microwave just has lower latency. Bandwidth is definitely down compared to fiber.
    - dahdum 10y ago
      I wondered about that, but since microwaves in air are 50% faster moving than the light through fiber it seemed correct. Probably should have said "Light through fiber optics is slower than microwaves in air".
- walrus01 10y ago
  Light in fiber moves at about 0.66c due to bouncing off the walls of the fiber trillions of times in a short distance.
  - eck 10y ago
    It moves at that speed because the index of refraction of glass is about 1.5. In single-mode fiber the light doesn't really bounce off the walls.
    - sgt101 10y ago
      Also significant latency is imposed by the network architecture vs the choice of bearer, and by shared vs single user. My guess is that the main driver is actually to get a private channel with qos guarantees and as few retransmission hops and security bumps as possible.
ldayley 10y ago
For original, in-depth, on-the-ground, and ongoing commentary on HFT developments in this region I recommend reading the "Sniper in Mahwah" blog(1). It gets a lot more technical, among other things. His posts are regularly featured here on HN(2). (1)https://sniperinmahwah.wordpress.com/ https://sniperinmahwah.wordpress.com/ (2)https://hn.algolia.com/?query=sniperinmahwah https://hn.algolia.com/?query=sniperinmahwah
- chippy 10y ago
  Also of note, Mahwah is the small town where Wall Street effectively moved to.
goatforce5 10y ago
Can the council build the tower and then rent space to the network operators, using the money to fund local services?
- throwaway049 10y ago
  One plan is to require them to share a tower (rather than building two) but it would still be built with private money while still subject to an annual charge to be paid to the local authority. I assume this minimise financial risk to the local authority.
- walrus01 10y ago
  From a financial perspective it is not that costly to build a 300 meter guyed tower. FM radio stations in the Midwest and TV stations do it all the time. I've heard figures of around $2 million total for an 1800' in ND. Yes you could build a tower and rent space on it. Whether this makes sense for a local government to do is another question.
SEJeff 10y ago
FWIW, said financial firms do pay very well for the rights to use those towers, and they almost always have to employ local or relatively local tower climbers and ground crew to maintain them. If Vodaphone wanted a tower in this town, it wouldn't be news. Disclaimer: I work for one of the two companies mentioned as having applied for permits in TFA.
- stuaxo 10y ago
  Pretty sure Vodafone would not be building one nearly as high.
titanomachy 10y ago
> for now at least, microwave signals are among the fastest ways to transmit orders between exchanges. I think the author could have asserted this with a little more confidence. Short of building a vacuum tube, which would be about 0.03% faster, microwave signal is (and will continue to be) the fastest way we of transmitting information from England to Germany, or from anywhere to anywhere else for that matter. Although, if anyone is going to completely overhaul our understanding of physics and develop faster-than-light communication it'll probably be high-frequency traders. I think Wall Street already hires more physics PhDs than all the universities in my country combined.
- gballan 10y ago
  I doubt that the technology choice is so clear cut. I'd guess that the major factors are the group velocity (i.e., the speed of modulation, rather than the speed of a wavefront), the group delay of the analog (roughly 1/bandwidth), and the clock/complexity of the digital stuff (coding and modulation and whatnot). Point-to-point microwave may well be better, but it'd take a while to put a good delay budget together.
- seanp2k2 10y ago
  Sad waste of talent, just like all the people trying to figure out how to get more eyeballs on advertising. Physics people trying to eek out a millisecond or two out of a trading system in order to front-run order books just seems so trite and short-sighted. It's personally very disappointing that we exist in an economy which so highly incentivizes this type of endeavor.
  - titanomachy 10y ago
    I agree, but I think a lot of those physicists would love to work in physics if they could find a job. No one spends 6 years studying neutrino flavours because they want to make tons of money working in finance.
tluyben2 10y ago
Why put it in a little village and not in the center of London? Cities (imho) are eye sore galore already so more eye sores don't really make a difference, while in a quaint English town it changes everything.
- Luc 10y ago
  Because the earth is a sphere and microwaves travel in a straight line. At my height, standing on the beach the horizon I see is only 5km away.
  - collyw 10y ago
    Huh, why does that make building it in the city / countryside any different?
bogomipz 10y ago
Is there a reason these HFT firms can't put servers in a DC in Frankfurt? What am I missing?
- pja 10y ago
  They almost certainly already have servers in a DC in Frankfurt - the point is that being able to communicate current prices between the major markets faster than anyone else gives you a trading edge over other market participants.
  - bogomipz 10y ago
    Doesn't the trading logic live on that machine in the a data center in Frankfurt? It responds to signals and executes trades based on those signal correct? It doesn't require hitting an API like in a standard web app right? From my admittedly limited exposure to an electronic trading shop, that logic was maybe updated a few times a day but largely ran as a state machine based on signals and market feeds. What am I missing?
    - pja 10y ago
      Sure, some HFT strats are locally encoded. But that’s not the only way to make money. If what you want to do is run arbitrage between different exchanges then being faster than everyone else gives you an edge. You can take advantage of price differentials before anyone else does plus you get to front run news that has market impact round the world before anyone else can get their orders in. There are plenty of ways to make money if you’re faster than everyone else at getting data from exchange A to exchange B.
- deleted 10y ago
  [deleted]
sireat 10y ago
I keep hoping that some of this massive brain drain trying to shave off the last ms of latency (FPGAwork, microwave towers, etc etc) will somehow translate into some advancement good for the overall society. Also, I hope the rapidly diminishing returns will stop this ridiculous arms race.
upofadown 10y ago
That's quite the long path over water. Hope they don't have strong temperature inversions there... Perhaps the plan is to just quit trading when the link is down. Make money when they can...

58 points by chollida1 10y ago

Yet another case of NIMBYism. Why does the community get to decide on what is done with private property? A radio tower mast harms nobody, will not significantly affect traffic, utilization of public utilities, or pollute. It's telling, the comment at the end. 100,000 pounds? Not enough. We need to extract more from those evil financial companies, because they can afford it. What a naked money grab.

peatfreak 10y ago
I can't tell if you're serious, or this is just brilliant satire.
wlesieutre 10y ago
> What a naked money grab. Whereas high frequency trading is what, exactly? It'd be one thing if the radio tower were needed to serve a useful purpose, but why should they be able to impose it on a community to shave a couple milliseconds off of latency so financiers can play stock market games? Maybe I'm not well educated on the issue, but is HFT not just a gigantic zero-sum arms race where the participants would all love to stop wasting money on it except they're worried that someone else would one-up them by half a millisecond?
- walrus01 10y ago
  It is a really good question whether it is the morally correct thing for ANYONE to aid and abed HFT firms.
  - MichaelGG 10y ago
    HFT reduces spreads. End users end up benefiting from lower prices. If you wanted to make HFT less of a game, adding much higher precision would help. So instead of pricing in increments of a penny, which is a lot, try, say, 1/100,000th of a penny (8 digit precision on the price). If we accept financial services as a whole to be OK, then HFT certainly is. I'd suggest the book "Dark Pools": https://www.amazon.com/Dark-Pools-Machine-Traders-Rigging/dp/0307887189/ref=pd_sim_14_1?ie=UTF8&dpID=51DtN%2BetT1L&dpSrc=sims&preST=_AC_UL320_SR208%2C320_&psc=1&refRID=ZN3KREEXAPQ9XZVJ7D5H https://www.amazon.com/Dark-Pools-Machine-Traders-Rigging/dp... It describes how automatic trading started. If you're a programmer, you'll probably have your mouth hanging open realising how up-for-grabs so much money was. At least that's how it sounded on reading it.
    - alimw 10y ago
      > HFT reduces spreads. End users end up benefiting from lower prices. Is this really true? It's hard to understand how the fact that one guy can trade with a delay of two microseconds instead of three will benefit the market as a whole. I can tell you it is commonly thought that HFT's profits come at someone else's cost, and that someone else is precisely your "end user". See "front-running".
      - MichaelGG 10y ago
        Front running is when you take your customers' orders, then use that knowledge to cheat them. For instance, your customer gives you an order to buy a stock. You then go and buy a bunch first, then sell to them at a profit. Front running has nothing to do with speed. And since HFT firms don't have customers generally, they simply cannot front run. The profits have come at the cost of other market makers - they're all HFT now. There's also the ability to adjust pricing quickly, so that when some large firm tries to buy or sell a large block, they don't get to avoid price impact as easily.
        dredmorbius 10y ago
        Front-running is precisely what Michael Lewis's Flash Boys is about. The trades intercepted by HFT don't constitute marterial market information which could change the behavior of the trader being front-run. They can only serve, much as with Sysiphus, to take an existing transaction opportunity from them, after having been committed to it.
    - matt_wulfeck 10y ago
      Sweet the spreads are reduced. Thanks HFT! I've been up all night worrying about them. Everyone profiting from HFT are trying desperately to convince everyone else that they provide a service and benefit and they just can't understand why normal folks aren't buying it. The amount of power of HFT to move markets is frightening. Like, for example bogus assassination tweet sending the stock markets plunging $136 billion in two minutes* * http://www.bloomberg.com/news/articles/2013-04-23/fake-report-erasing-136-billion-shows-market-s-fragility http://www.bloomberg.com/news/articles/2013-04-23/fake-repor...
- pjlegato 10y ago
  This is a straw man reply. It isn't responsive to the original objection -- why should the government get to decide whether someone can build a radio tower on private property, provided that it doesn't adversely impact anyone else? The proposed use of the tower is irrelevant.
  - wlesieutre 10y ago
    I don't know what the land use laws are over there, but I can tell you that in the US, the government frequently gets to decide whether someone can build a radio tower on private property. I'm fairly certain if someone bought a plot of land near me and said "I'm building a 1000 ft. tall radio mast for stock trading" they'd be promptly told to fuck off. On the other hand, if a project is being built to provide a public benefit, say for an emergency radio system or something, then variances are more likely.
    - foota 10y ago
      I don't think that answers they question of why the government should be able to do so.
      - wlesieutre 10y ago
        A more extreme example to make a point: because it would be bad if someone could buy up the house next to me, knock it down, and replace it with a sewage plant. At least in the US, a large component of limiting land use is to prevent someone from moving in with some undesirable feature and tanking an entire neighborhood's property values, which in many cases are homes that represent a large fraction of a lot of people's net worth (and retirement funds). Taken too far, this can lead to crazy NIMBYism that keeps anything from being built anywhere, but I don't think it's unreasonable to say "No, you can't put a landfill in the residential area that's been developed here for 150 years." Whether you think a 1000 ft. radio mast falls into that category is up for debate, but a full-on libertarian "I can do whatever I want wherever I want to" system wouldn't lead to very good outcomes.
        10y ago
aaron695 10y ago
> A radio tower mast harms nobody Visual pollution is a thing. And an important thing. Why as a well off society we don't do more about it surprises me. If for some reason noone could see the mast, your point would be 100% valid.
PhasmaFelis 10y ago
Note that, from the article, this is a town that gets a good chunk of its economy from tourism. (Brits love their holidays.) So something that vacation-goers consider an eyesore could, in fact, cause significant economic damage. It is kind of funny that you use "naked money grab" in defense of HFTs.
- matt_wulfeck 10y ago
  Not only that, but a gigantic (literally) liabilty of the company that maintains the tower goes out of business.
- deleted 10y ago
  [deleted]
bogomipz 10y ago
Yes, correct its not just a cell tower its 300 meters! It is not in sympathy with the scale of its surroundings. As such it constitutes a blight. It's an eyesore with no public benefit. NIMBYism isn't always a bad thing. Its easy to throw the NIMBY term around when its not your own backyard.
tmnvix 10y ago
There's nothing inherently wrong with NIMBYism. Would you be at all concerned if your neighbour planned to place a radio mast as tall as the eiffel tower in their backyard? The local's concerns are entirely reasonable.

mjevans 10y ago

Why aren't they building a fiber optic link? Is it that the shipping channel makes it too likely for disruption of the link?

dahdum 10y ago
Fiber optics are slower than microwave, and the routes aren't as straight.
- tormeh 10y ago
  I'm being pedantic but microwave just has lower latency. Bandwidth is definitely down compared to fiber.
  - dahdum 10y ago
    I wondered about that, but since microwaves in air are 50% faster moving than the light through fiber it seemed correct. Probably should have said "Light through fiber optics is slower than microwaves in air".
walrus01 10y ago
Light in fiber moves at about 0.66c due to bouncing off the walls of the fiber trillions of times in a short distance.
- eck 10y ago
  It moves at that speed because the index of refraction of glass is about 1.5. In single-mode fiber the light doesn't really bounce off the walls.
  - sgt101 10y ago
    Also significant latency is imposed by the network architecture vs the choice of bearer, and by shared vs single user. My guess is that the main driver is actually to get a private channel with qos guarantees and as few retransmission hops and security bumps as possible.

ldayley 10y ago

For original, in-depth, on-the-ground, and ongoing commentary on HFT developments in this region I recommend reading the "Sniper in Mahwah" blog(1). It gets a lot more technical, among other things. His posts are regularly featured here on HN(2). (1)https://sniperinmahwah.wordpress.com/ https://sniperinmahwah.wordpress.com/ (2)https://hn.algolia.com/?query=sniperinmahwah https://hn.algolia.com/?query=sniperinmahwah

chippy 10y ago
Also of note, Mahwah is the small town where Wall Street effectively moved to.

goatforce5 10y ago

Can the council build the tower and then rent space to the network operators, using the money to fund local services?

throwaway049 10y ago
One plan is to require them to share a tower (rather than building two) but it would still be built with private money while still subject to an annual charge to be paid to the local authority. I assume this minimise financial risk to the local authority.
walrus01 10y ago
From a financial perspective it is not that costly to build a 300 meter guyed tower. FM radio stations in the Midwest and TV stations do it all the time. I've heard figures of around $2 million total for an 1800' in ND. Yes you could build a tower and rent space on it. Whether this makes sense for a local government to do is another question.

SEJeff 10y ago

FWIW, said financial firms do pay very well for the rights to use those towers, and they almost always have to employ local or relatively local tower climbers and ground crew to maintain them. If Vodaphone wanted a tower in this town, it wouldn't be news. Disclaimer: I work for one of the two companies mentioned as having applied for permits in TFA.

stuaxo 10y ago
Pretty sure Vodafone would not be building one nearly as high.

titanomachy 10y ago

> for now at least, microwave signals are among the fastest ways to transmit orders between exchanges. I think the author could have asserted this with a little more confidence. Short of building a vacuum tube, which would be about 0.03% faster, microwave signal is (and will continue to be) the fastest way we of transmitting information from England to Germany, or from anywhere to anywhere else for that matter. Although, if anyone is going to completely overhaul our understanding of physics and develop faster-than-light communication it'll probably be high-frequency traders. I think Wall Street already hires more physics PhDs than all the universities in my country combined.

gballan 10y ago
I doubt that the technology choice is so clear cut. I'd guess that the major factors are the group velocity (i.e., the speed of modulation, rather than the speed of a wavefront), the group delay of the analog (roughly 1/bandwidth), and the clock/complexity of the digital stuff (coding and modulation and whatnot). Point-to-point microwave may well be better, but it'd take a while to put a good delay budget together.
seanp2k2 10y ago
Sad waste of talent, just like all the people trying to figure out how to get more eyeballs on advertising. Physics people trying to eek out a millisecond or two out of a trading system in order to front-run order books just seems so trite and short-sighted. It's personally very disappointing that we exist in an economy which so highly incentivizes this type of endeavor.
- titanomachy 10y ago
  I agree, but I think a lot of those physicists would love to work in physics if they could find a job. No one spends 6 years studying neutrino flavours because they want to make tons of money working in finance.

tluyben2 10y ago

Why put it in a little village and not in the center of London? Cities (imho) are eye sore galore already so more eye sores don't really make a difference, while in a quaint English town it changes everything.

Luc 10y ago
Because the earth is a sphere and microwaves travel in a straight line. At my height, standing on the beach the horizon I see is only 5km away.
- collyw 10y ago
  Huh, why does that make building it in the city / countryside any different?

bogomipz 10y ago

Is there a reason these HFT firms can't put servers in a DC in Frankfurt? What am I missing?

pja 10y ago
They almost certainly already have servers in a DC in Frankfurt - the point is that being able to communicate current prices between the major markets faster than anyone else gives you a trading edge over other market participants.
- bogomipz 10y ago
  Doesn't the trading logic live on that machine in the a data center in Frankfurt? It responds to signals and executes trades based on those signal correct? It doesn't require hitting an API like in a standard web app right? From my admittedly limited exposure to an electronic trading shop, that logic was maybe updated a few times a day but largely ran as a state machine based on signals and market feeds. What am I missing?
  - pja 10y ago
    Sure, some HFT strats are locally encoded. But that’s not the only way to make money. If what you want to do is run arbitrage between different exchanges then being faster than everyone else gives you an edge. You can take advantage of price differentials before anyone else does plus you get to front run news that has market impact round the world before anyone else can get their orders in. There are plenty of ways to make money if you’re faster than everyone else at getting data from exchange A to exchange B.
deleted 10y ago
[deleted]

sireat 10y ago

I keep hoping that some of this massive brain drain trying to shave off the last ms of latency (FPGAwork, microwave towers, etc etc) will somehow translate into some advancement good for the overall society. Also, I hope the rapidly diminishing returns will stop this ridiculous arms race.

upofadown 10y ago

That's quite the long path over water. Hope they don't have strong temperature inversions there... Perhaps the plan is to just quit trading when the link is down. Make money when they can...