5 ms·

How the transatlantic telegraph cable changed finance (2019)

63 points by scrlk 2y ago

Projectiboga 2y ago
People at the Philadelphia Stock Exchange back in colonial America had a system where when a ship landed in NYC it would have info about ships coming one or more days later to Philadelphia and they would semaphore the info over to high points in NJ and on down though to Philadelphia. The info would get from NYC to the exchange in 5 to 10 minutes, and insiders were able to trade at advantage with that info.
andyjohnson0 2y ago
For an accessible book on the history and impact of the early telegraph networks I'd recommend The Victorian Internet by Tom Standage.
- Stratoscope 2y ago
  I heartily second that. It's one of my favorite books. For anyone curious about it, you can click the Read Sample button below the cover image here, or download the sample to your Kindle device or app: https://www.amazon.com/dp/B07JW5WQSR https://www.amazon.com/dp/B07JW5WQSR If Vint Cerf's foreword and the first chapter don't convince you to buy the book, I don't know what will. Another good read, as many know, is Mother Earth Mother Board. It is more about the modern undersea fiber cables, but touches on the early telegraph cables too: https://www.wired.com/1996/12/ffglass/ https://www.wired.com/1996/12/ffglass/ On my PC, this article says it is for subscribers only. But on my phone (Android with Chrome) it loads up just fine. Go figure.
  - hackernewds 2y ago
    couldn't see where to read the first chapter
    - Stratoscope 2y ago
      On desktop or mobile? My note about the Read Sample button was on a desktop browser. On mobile, you should be able to just tap the cover image. Either way, you can then scroll up or down in the preview. Let me know if you got that far, or where you did get to, and I will be happy to assist further. (I'm not the Amazon Kindle Sample Support Guy, but I like this book so much that I don't mind helping sort this out.)
  - daveoc64 2y ago
    Amusingly, the Kindle edition isn't sold in the UK. Transatlantic commerce has been foiled by copyright.
- pipecmd 2y ago
  You also will find a ton of contemporary (and copyright free) books on https://books.google.com/ https://books.google.com/ in many languages, which I find way more amazing to read today than books looking back on that time with today's mindset and all... A favorite of mine is "Lebenserinnerungen", by Werner von Siemens, 1892: https://www.google.ch/books/edition/Lebenserinnerungen/SkIOAAAAYAAJ https://www.google.ch/books/edition/Lebenserinnerungen/SkIOA... It's a lovely topic to dive into and adjust your search key words according to whatever aspect interests you the most (engineering, business, economics, public service (european countries) vs free market (USA), politics, war, travel/tourism, time/clocks, railroads, ..., telegraphy changed everything).
gtsnexp 2y ago
Fast forward to today, high-frequency trading shops in Europe are investing in software-defined radio and FPGA technology to shave off microseconds in trade execution. This quest for speed mirrors the impact of the original cable. The core takeaway is simple: advancements in communication technology can drastically improve market efficiency and connectivity, transforming local markets into global ones almost overnight.
- kjellsbells 2y ago
  Ooh, thats a rabbit hole I want to look into. Do you have any good places to start on the whole SDR and FPGA = profit?
  - gtsnexp 2y ago
    I think most of this is highly proprietary and well-guarded know-how. Optiver in Amsterdam was hiring RF and FPGA folks not long ago.
  - ryankrage77 2y ago
    Not quite the educational content you're looking for, but you might enjoy the film 'The Hummingbird Project'. It's the story of two cousins who work in high-frequency trading attempting to lay a perfectly straight fibre optic cable from Kansas to New Jersey. It's more about the morals of their increasingly desperate and underhanded actions to complete the project, but there's plenty of mostly-realistic technical scenes too. From memory there's considerations about fibre optics vs radio, how to shave milliseconds off those links, and of course the engineering challenge of drilling a ~1000 mile tunnel.
  - iamandoni 2y ago
    Check out the Sniper in Mahwah blog. Most of this space is proprietary, but the author uncovers a lot of the landscape from public records.
- kragen 2y ago
  nanoseconds sometimes
photochemsyn 2y ago
Tax each transaction, that'd put a damper on high-speed trading. If you want to see the arguments for eliminating HFT, here's the central issue, there are others: > "Former economists for the Commodity Futures Trading Commission (CFTC) studied HFT firms over a two-year period and found that revenue was concentrated among a handful of companies in a winner-takes-all market structure. " https://www.investopedia.com/financial-edge/0113/has-high-frequency-trading-ruined-the-stock-market-for-the-rest-of-us.aspx https://www.investopedia.com/financial-edge/0113/has-high-fr...
- immibis 2y ago
  I've also heard of stock exchanges that added deliberate delays.
- TeaBrain 2y ago
  That's not an argument for trying to eliminate HFT market makers. The competition referenced between HFT market making firms that results in a winner take all structure between the HFT firms, is a competition to take the bid/ask spread, which is something that only HFT firms are trying to do. It should not be taken to mean that HFT firms are the sole collectors of profits in the markets, but that the best HFT firms out-compete the other HFT firms at a very specific type of trading. This competition to take the spread between HFT market makers decreases the spread and increases liquidity for everyone who isn't HFT, which lowers trading costs for non-HFT participants in the markets. Prior to the advent of HFT, slippage costs were consistently higher, due to how much larger the bid-ask was and due to how much less liquidity was present around the bid-ask at any given price, which the presence of HFT has helped to improve. https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feabdc0 https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feab...
- quickthrowman 2y ago
  Liquidity is good for markets. Taxing every trade would reduce liquidity and increase transaction costs for all market participants. https://en.m.wikipedia.org/wiki/Market_liquidity https://en.m.wikipedia.org/wiki/Market_liquidity
  - 2y ago
retrac 2y ago
Tangential, but one thing I recently learned about telegraphy was that it was one of the final tools, for establishing an accurate global map. Taking your longitude requires knowing what time it is. An hour's error is 15 degrees of rotation or more than a thousand kilometres. Just one second error is several hundred metres. Before the telegraph there was no standard time, not as we use it today, where it's the same second in New York and London. And synchronizing clocks used to be very difficult. In the 1850s, just before the cable, the US Coast and Geodetic Survey, would routinely ship chronometers between London and Boston every few weeks, to keep the American time standard synced with London, so that American ships could use the London-centric longitude definitions. And of course, this was back when clocks weren't terribly accurate, and a quality chronometer might lose or gain a few seconds a month. In the 1840s, American surveyors started using long-distance telegraph links to make longitude measurements in different locations at the same time. The distance between the coasts was established within a few hundred metres by the late 19th century. Some more reading: https://adsabs.harvard.edu/full/1897AJ.....18...25S https://adsabs.harvard.edu/full/1897AJ.....18...25S "The telegraphic longitude net of the United State and its connection with that of Europe, as developed by the Coast and Geodetic Survey between 1866 and 1896"
- acchow 2y ago
  > In the 1850s, just before the cable, the US Coast and Geodetic Survey, would routinely ship chronometers between London and Boston every few weeks, to keep the American time standard synced with London It is absolutely mind boggling how far technology has progressed in less than 2 centuries.
  - genter 2y ago
    There's people alive today, that when they were born, horses were more common than cars.
jgalt212 2y ago
fun fact > The term cable is a slang term used by foreign exchange traders to refer to the exchange rate between the pound sterling and US dollar. The term originated in the mid-19th century, when the exchange rate between the US dollar and sterling began to be transmitted across the Atlantic by a submarine communications cable. -- wiki

63 points by scrlk 2y ago

People at the Philadelphia Stock Exchange back in colonial America had a system where when a ship landed in NYC it would have info about ships coming one or more days later to Philadelphia and they would semaphore the info over to high points in NJ and on down though to Philadelphia. The info would get from NYC to the exchange in 5 to 10 minutes, and insiders were able to trade at advantage with that info.

andyjohnson0 2y ago

For an accessible book on the history and impact of the early telegraph networks I'd recommend The Victorian Internet by Tom Standage.

Stratoscope 2y ago
I heartily second that. It's one of my favorite books. For anyone curious about it, you can click the Read Sample button below the cover image here, or download the sample to your Kindle device or app: https://www.amazon.com/dp/B07JW5WQSR https://www.amazon.com/dp/B07JW5WQSR If Vint Cerf's foreword and the first chapter don't convince you to buy the book, I don't know what will. Another good read, as many know, is Mother Earth Mother Board. It is more about the modern undersea fiber cables, but touches on the early telegraph cables too: https://www.wired.com/1996/12/ffglass/ https://www.wired.com/1996/12/ffglass/ On my PC, this article says it is for subscribers only. But on my phone (Android with Chrome) it loads up just fine. Go figure.
- hackernewds 2y ago
  couldn't see where to read the first chapter
  - Stratoscope 2y ago
    On desktop or mobile? My note about the Read Sample button was on a desktop browser. On mobile, you should be able to just tap the cover image. Either way, you can then scroll up or down in the preview. Let me know if you got that far, or where you did get to, and I will be happy to assist further. (I'm not the Amazon Kindle Sample Support Guy, but I like this book so much that I don't mind helping sort this out.)
- daveoc64 2y ago
  Amusingly, the Kindle edition isn't sold in the UK. Transatlantic commerce has been foiled by copyright.
pipecmd 2y ago
You also will find a ton of contemporary (and copyright free) books on https://books.google.com/ https://books.google.com/ in many languages, which I find way more amazing to read today than books looking back on that time with today's mindset and all... A favorite of mine is "Lebenserinnerungen", by Werner von Siemens, 1892: https://www.google.ch/books/edition/Lebenserinnerungen/SkIOAAAAYAAJ https://www.google.ch/books/edition/Lebenserinnerungen/SkIOA... It's a lovely topic to dive into and adjust your search key words according to whatever aspect interests you the most (engineering, business, economics, public service (european countries) vs free market (USA), politics, war, travel/tourism, time/clocks, railroads, ..., telegraphy changed everything).

gtsnexp 2y ago

Fast forward to today, high-frequency trading shops in Europe are investing in software-defined radio and FPGA technology to shave off microseconds in trade execution. This quest for speed mirrors the impact of the original cable. The core takeaway is simple: advancements in communication technology can drastically improve market efficiency and connectivity, transforming local markets into global ones almost overnight.

kjellsbells 2y ago
Ooh, thats a rabbit hole I want to look into. Do you have any good places to start on the whole SDR and FPGA = profit?
- gtsnexp 2y ago
  I think most of this is highly proprietary and well-guarded know-how. Optiver in Amsterdam was hiring RF and FPGA folks not long ago.
- ryankrage77 2y ago
  Not quite the educational content you're looking for, but you might enjoy the film 'The Hummingbird Project'. It's the story of two cousins who work in high-frequency trading attempting to lay a perfectly straight fibre optic cable from Kansas to New Jersey. It's more about the morals of their increasingly desperate and underhanded actions to complete the project, but there's plenty of mostly-realistic technical scenes too. From memory there's considerations about fibre optics vs radio, how to shave milliseconds off those links, and of course the engineering challenge of drilling a ~1000 mile tunnel.
- iamandoni 2y ago
  Check out the Sniper in Mahwah blog. Most of this space is proprietary, but the author uncovers a lot of the landscape from public records.
kragen 2y ago
nanoseconds sometimes

photochemsyn 2y ago

Tax each transaction, that'd put a damper on high-speed trading. If you want to see the arguments for eliminating HFT, here's the central issue, there are others: > "Former economists for the Commodity Futures Trading Commission (CFTC) studied HFT firms over a two-year period and found that revenue was concentrated among a handful of companies in a winner-takes-all market structure. " https://www.investopedia.com/financial-edge/0113/has-high-frequency-trading-ruined-the-stock-market-for-the-rest-of-us.aspx https://www.investopedia.com/financial-edge/0113/has-high-fr...

immibis 2y ago
I've also heard of stock exchanges that added deliberate delays.
TeaBrain 2y ago
That's not an argument for trying to eliminate HFT market makers. The competition referenced between HFT market making firms that results in a winner take all structure between the HFT firms, is a competition to take the bid/ask spread, which is something that only HFT firms are trying to do. It should not be taken to mean that HFT firms are the sole collectors of profits in the markets, but that the best HFT firms out-compete the other HFT firms at a very specific type of trading. This competition to take the spread between HFT market makers decreases the spread and increases liquidity for everyone who isn't HFT, which lowers trading costs for non-HFT participants in the markets. Prior to the advent of HFT, slippage costs were consistently higher, due to how much larger the bid-ask was and due to how much less liquidity was present around the bid-ask at any given price, which the presence of HFT has helped to improve. https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feabdc0 https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feab...
quickthrowman 2y ago
Liquidity is good for markets. Taxing every trade would reduce liquidity and increase transaction costs for all market participants. https://en.m.wikipedia.org/wiki/Market_liquidity https://en.m.wikipedia.org/wiki/Market_liquidity
- 2y ago

retrac 2y ago

Tangential, but one thing I recently learned about telegraphy was that it was one of the final tools, for establishing an accurate global map. Taking your longitude requires knowing what time it is. An hour's error is 15 degrees of rotation or more than a thousand kilometres. Just one second error is several hundred metres. Before the telegraph there was no standard time, not as we use it today, where it's the same second in New York and London. And synchronizing clocks used to be very difficult. In the 1850s, just before the cable, the US Coast and Geodetic Survey, would routinely ship chronometers between London and Boston every few weeks, to keep the American time standard synced with London, so that American ships could use the London-centric longitude definitions. And of course, this was back when clocks weren't terribly accurate, and a quality chronometer might lose or gain a few seconds a month. In the 1840s, American surveyors started using long-distance telegraph links to make longitude measurements in different locations at the same time. The distance between the coasts was established within a few hundred metres by the late 19th century. Some more reading: https://adsabs.harvard.edu/full/1897AJ.....18...25S https://adsabs.harvard.edu/full/1897AJ.....18...25S "The telegraphic longitude net of the United State and its connection with that of Europe, as developed by the Coast and Geodetic Survey between 1866 and 1896"

acchow 2y ago
> In the 1850s, just before the cable, the US Coast and Geodetic Survey, would routinely ship chronometers between London and Boston every few weeks, to keep the American time standard synced with London It is absolutely mind boggling how far technology has progressed in less than 2 centuries.
- genter 2y ago
  There's people alive today, that when they were born, horses were more common than cars.

jgalt212 2y ago

fun fact > The term cable is a slang term used by foreign exchange traders to refer to the exchange rate between the pound sterling and US dollar. The term originated in the mid-19th century, when the exchange rate between the US dollar and sterling began to be transmitted across the Atlantic by a submarine communications cable. -- wiki