8 ms·

Current fiber optic cables transmit signals at 2/3rds the speed of light. Modeling has shown that starlink's laser backbone would allow it to beat deep-sea cab

Current fiber optic cables transmit signals at 2/3rds the speed of light. Modeling has shown that starlink's laser backbone would allow it to beat deep-sea cables in some situations. This article estimates a NYSE -> FTSE reduction from 76ms to 43ms. I wouldn't be surprised to learn that there is a HFT bidding war going on. https://archmeregreenarch.org/1456/news/starlink-and-the-rise-of-a-new-space-internet/ https://archmeregreenarch.org/1456/news/starlink-and-the-ris... There is a newer version of fiber optic cable that uses a hollow core. Testing has shown it transmits signals at nearly the speed of light. It is very difficult to produce at scale and will require a generational shift to deploy. https://www.nature.com/articles/s41467-020-19910-7 https://www.nature.com/articles/s41467-020-19910-7

HWR_14 3y ago
Wouldn't they have to relay between many satellites due to line of sight? And wouldn't that eat up any decrease in time of flight for the signal itself?
- nine_k 3y ago
  I suspect that retransmission with amplification only, without much processing, can be really fast. Modern electronics can routinely do sub-nanosecond latency.
  - londons_explore 3y ago
    Indeed. If the system is designed with latency in mind, then the receive to send latency can be as low as a few feet of distance equivalent.
posnet 3y ago
The question isn't whether satellite links can beat deep-sea cables, it's whether they can beat shortwave. https://sniperinmahwah.wordpress.com/2018/05/07/shortwave-trading-part-i-the-west-chicago-tower-mystery/ https://sniperinmahwah.wordpress.com/2018/05/07/shortwave-tr...
- bhouston 3y ago
  And HFT setups are also nearly colocated with the exchanges I understand -- as close as they can get physically, so adding a hop to space and back may be adding quite a bit of distance.
  - heipei 3y ago
    This would be about reducing latency between these two exchanges to enable arbitrage opportunities the way I understood it.
    - ortusdux 3y ago
      Exactly. IEX exchange is relatively new, and their big innovation is that they use long spools of fiberoptic wire to delay their user's connections, thus creating an even playing field. https://www.sec.gov/files/07feb18_hu_iex_becoming_an_exchange.pdf https://www.sec.gov/files/07feb18_hu_iex_becoming_an_exchang... "The reduction in trading costs (spreads) is broadly consistent with recent theories on how speed advantages may be used to exploit mechanical arbitrage opportunities. These theories suggest that market makers face adverse selection from fast traders even in the absence of traditional “fundamental” informed trading. For instance, Budish et al. (2015) defnes “quote sniping” as the mechanical arbitrage of taking “stale” quotes before market makers can cancel. In his Comment Letter on IEX’s Exchange Application, Eric Budish argues that IEX’s speed bump may be able to mitigate quote sniping as it allows IEX’s pegged orders to avoid executing against market orders at stale prices.7 Moreover, cross-sectional di˙erences in spreads in response to IEX’s protected quote are consistent with recent theory suggesting that exchange speed is a double-edged sword for market makers (Menkveld and Zoican, 2016). On one hand, faster exchanges allow market makers to update their quotes faster, reducing spreads. On the other hand, higher exchange speed results in a higher probability of quote sniping. Hence, the results support this more nuanced view of the net e˙ects of speed on trading costs. "
      - pests 3y ago
        How does it create a level playing field? Everyone gets the same treatment. Everyone is delayed the same amount.
gorkish 3y ago
> require a generational shift to deploy. Photonic bandgap / Bragg fiber is being produced in quantity, and some subsea cables are using it. I'm pretty sure it's the satellite lasers that require the generational shift. One subsea cable has no bearing on any other; once the first is installed, you're up and running. not so with laser-connected swarms.
- ortusdux 3y ago
  Starlink's laser connections have been active for a year now.
  - cma 3y ago
    What's the latency NY to Australia all over Starlink with laser interconnect now?
    - modeless 3y ago
      I don't know if Starlink is routing packets that way. I think it's more likely that they route packets to a ground station as soon as possible to save laser link capacity for customers that actually need it, like ones in the middle of the ocean. If you want your packets routed all the way around the Earth through space then you'd probably need a special contract with SpaceX.
  - thesz 3y ago
    [1] https://wccftech.com/starlink-turns-on-laser-satellites-for-region-with-fourth-month-long-night/ https://wccftech.com/starlink-turns-on-laser-satellites-for-... Judging from [1], lasers are used not for inter-satellite links, but for downstream or upstream links - from satellites to the ground. Intersatellite links require precise machinery, such as picometer-precise positioning systems [2]. [2] https://www.pi-usa.us/fileadmin/user_upload/pi_us/files/product_datasheets/P363_Pico-Positioning_Piezo_Stage.pdf https://www.pi-usa.us/fileadmin/user_upload/pi_us/files/prod... Also, there should be compensation for satellite rotation, initial targeting and tracking. At ~12km between satellites (~4000 on 550 km orbit), the (possible) target of laser signal receiver which, say, is one meter in diameter will be one third of an angular minute. It is not impossible to target that initially, but keep in mind that laser beam is very focused and its power drops significantly with the angular distance. I really do not know how to even target satellites' receivers initially, let alone compensate for rotation and track these targets afterwards.
activiation 3y ago
HFTs are in the nanoseconds range, not milliseconds... They rent space AT the exchanges... They remove firewalls and such to shave even more time
- client4 3y ago
  Only within the DC, not between exchanges.
ajsnigrutin 3y ago
Am I the only one who thinks HFT should be forbidden? Stocks and investments are a nice thing to have, since you can buy a share of a company you believe in, they get the money, do stuff, you get dividends and in the end can sell the stock after some time too. HFT changes these "beliefs in company" to "beliefs that the stock will go up", and the timeframe of those "beliefs" is sometimes in milliseconds. This turns classic "investment" into a computer game with a lot of real money.
- Loughla 3y ago
  Honestly, I don't understand how they're legal, either. HFT just seems like the most naked of naked cash grabs in finance.
  - lxgr 3y ago
    This seems to be a common sentiment – but do you know what HFTs actually do, and why it works? I was pretty skeptical too, but the more I look into it, the more it just boils down to market making (providing liquidity) and arbitrage (improving price quality across exchanges). There might be dirty tricks there too – I'm only speaking for legal trading practices here. And if an HFT makes its profit using illegal methods, what's the difference between that and other financial crimes like insider trading, collusion to frontrunning etc.? I don't really get the (to me somewhat irrational/uninformed) focus on HFTs, when things like payment for order flow probably "siphons off" just as much from retail investors' trades.
- willis936 3y ago
  What would that look like? If you rate limit stock exchanges to something like 1 update per minute then there will likely be the same amount of networking and computation going on to speculate on the next update and calculate optimal plays. It just moves it to behind closed doors where it is harder to know if shenanigans are going on. It would take a heavier hand to push against this problem. I'm all for it, I'm just not clever enough or knowledgeable enough to know what would be a good regulation that would fly in congress.
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HWR_14 3y ago

Wouldn't they have to relay between many satellites due to line of sight? And wouldn't that eat up any decrease in time of flight for the signal itself?

nine_k 3y ago
I suspect that retransmission with amplification only, without much processing, can be really fast. Modern electronics can routinely do sub-nanosecond latency.
- londons_explore 3y ago
  Indeed. If the system is designed with latency in mind, then the receive to send latency can be as low as a few feet of distance equivalent.

posnet 3y ago

The question isn't whether satellite links can beat deep-sea cables, it's whether they can beat shortwave. https://sniperinmahwah.wordpress.com/2018/05/07/shortwave-trading-part-i-the-west-chicago-tower-mystery/ https://sniperinmahwah.wordpress.com/2018/05/07/shortwave-tr...

bhouston 3y ago
And HFT setups are also nearly colocated with the exchanges I understand -- as close as they can get physically, so adding a hop to space and back may be adding quite a bit of distance.
- heipei 3y ago
  This would be about reducing latency between these two exchanges to enable arbitrage opportunities the way I understood it.
  - ortusdux 3y ago
    Exactly. IEX exchange is relatively new, and their big innovation is that they use long spools of fiberoptic wire to delay their user's connections, thus creating an even playing field. https://www.sec.gov/files/07feb18_hu_iex_becoming_an_exchange.pdf https://www.sec.gov/files/07feb18_hu_iex_becoming_an_exchang... "The reduction in trading costs (spreads) is broadly consistent with recent theories on how speed advantages may be used to exploit mechanical arbitrage opportunities. These theories suggest that market makers face adverse selection from fast traders even in the absence of traditional “fundamental” informed trading. For instance, Budish et al. (2015) defnes “quote sniping” as the mechanical arbitrage of taking “stale” quotes before market makers can cancel. In his Comment Letter on IEX’s Exchange Application, Eric Budish argues that IEX’s speed bump may be able to mitigate quote sniping as it allows IEX’s pegged orders to avoid executing against market orders at stale prices.7 Moreover, cross-sectional di˙erences in spreads in response to IEX’s protected quote are consistent with recent theory suggesting that exchange speed is a double-edged sword for market makers (Menkveld and Zoican, 2016). On one hand, faster exchanges allow market makers to update their quotes faster, reducing spreads. On the other hand, higher exchange speed results in a higher probability of quote sniping. Hence, the results support this more nuanced view of the net e˙ects of speed on trading costs. "
    - pests 3y ago
      How does it create a level playing field? Everyone gets the same treatment. Everyone is delayed the same amount.

gorkish 3y ago

> require a generational shift to deploy. Photonic bandgap / Bragg fiber is being produced in quantity, and some subsea cables are using it. I'm pretty sure it's the satellite lasers that require the generational shift. One subsea cable has no bearing on any other; once the first is installed, you're up and running. not so with laser-connected swarms.

ortusdux 3y ago
Starlink's laser connections have been active for a year now.
- cma 3y ago
  What's the latency NY to Australia all over Starlink with laser interconnect now?
  - modeless 3y ago
    I don't know if Starlink is routing packets that way. I think it's more likely that they route packets to a ground station as soon as possible to save laser link capacity for customers that actually need it, like ones in the middle of the ocean. If you want your packets routed all the way around the Earth through space then you'd probably need a special contract with SpaceX.
- thesz 3y ago
  [1] https://wccftech.com/starlink-turns-on-laser-satellites-for-region-with-fourth-month-long-night/ https://wccftech.com/starlink-turns-on-laser-satellites-for-... Judging from [1], lasers are used not for inter-satellite links, but for downstream or upstream links - from satellites to the ground. Intersatellite links require precise machinery, such as picometer-precise positioning systems [2]. [2] https://www.pi-usa.us/fileadmin/user_upload/pi_us/files/product_datasheets/P363_Pico-Positioning_Piezo_Stage.pdf https://www.pi-usa.us/fileadmin/user_upload/pi_us/files/prod... Also, there should be compensation for satellite rotation, initial targeting and tracking. At ~12km between satellites (~4000 on 550 km orbit), the (possible) target of laser signal receiver which, say, is one meter in diameter will be one third of an angular minute. It is not impossible to target that initially, but keep in mind that laser beam is very focused and its power drops significantly with the angular distance. I really do not know how to even target satellites' receivers initially, let alone compensate for rotation and track these targets afterwards.

activiation 3y ago

HFTs are in the nanoseconds range, not milliseconds... They rent space AT the exchanges... They remove firewalls and such to shave even more time

client4 3y ago
Only within the DC, not between exchanges.

ajsnigrutin 3y ago

Am I the only one who thinks HFT should be forbidden? Stocks and investments are a nice thing to have, since you can buy a share of a company you believe in, they get the money, do stuff, you get dividends and in the end can sell the stock after some time too. HFT changes these "beliefs in company" to "beliefs that the stock will go up", and the timeframe of those "beliefs" is sometimes in milliseconds. This turns classic "investment" into a computer game with a lot of real money.

Loughla 3y ago
Honestly, I don't understand how they're legal, either. HFT just seems like the most naked of naked cash grabs in finance.
- lxgr 3y ago
  This seems to be a common sentiment – but do you know what HFTs actually do, and why it works? I was pretty skeptical too, but the more I look into it, the more it just boils down to market making (providing liquidity) and arbitrage (improving price quality across exchanges). There might be dirty tricks there too – I'm only speaking for legal trading practices here. And if an HFT makes its profit using illegal methods, what's the difference between that and other financial crimes like insider trading, collusion to frontrunning etc.? I don't really get the (to me somewhat irrational/uninformed) focus on HFTs, when things like payment for order flow probably "siphons off" just as much from retail investors' trades.
willis936 3y ago
What would that look like? If you rate limit stock exchanges to something like 1 update per minute then there will likely be the same amount of networking and computation going on to speculate on the next update and calculate optimal plays. It just moves it to behind closed doors where it is harder to know if shenanigans are going on. It would take a heavier hand to push against this problem. I'm all for it, I'm just not clever enough or knowledgeable enough to know what would be a good regulation that would fly in congress.

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