5 ms·

My guess is that the first customers for this cable will be in the finance industry. A 30% improvement in latency doesn't matter much for the layman, but in fin

My guess is that the first customers for this cable will be in the finance industry. A 30% improvement in latency doesn't matter much for the layman, but in finance, it can mean significant amounts of money. Already, an enterprising trader constructed a more direct line from Chicago -> NYC [1]. Going from 16ms -> 13ms was apparently worth $300 million. This fiber could bring a very large profit if you had exclusive rights to it via a patent. You could execute guaranteed-to-profit arbitrage strategies between any two markets if you were willing to build out the network. And no one could compete with you for a whole 15 years! [1] http://www.forbes.com/forbes/2010/0927/outfront-netscape-jim-barksdale-daniel-spivey-wall-street-speed-war.html http://www.forbes.com/forbes/2010/0927/outfront-netscape-jim...

arethuza 14y ago
And in another case - $1.5 billion to move London 60ms closer to Japan: http://www.extremetech.com/extreme/122989-1-5-billion-the-cost-of-cutting-london-toyko-latency-by-60ms http://www.extremetech.com/extreme/122989-1-5-billion-the-co...
hp50g 14y ago
(for the moment). HFT will eventually fall off a cliff or be regulated out of existence. I think the FSA in the UK are on this already.
- coob 14y ago
  Why would it be regulated out of existence? Does it not provide large amounts of liquidity?
  - hp50g 14y ago
    It does but there are some real downsides: Failures can cause exchange crashes big time. This has nearly happened a few times before. Risk is centralised and multiplied. HFT contributes to volatility. Hurts long term investment by human brokers.
    - michael_miller 14y ago
      To play devil's advocate: - Can't failures be counteracted by having failsafe measures? For example, if the market goes down more than 5% in a few-minute period, the market temporarily shuts down for a cooloff period of several hours to diagnose what's happening. - Isn't HFT irrelevant to long term investment, given that it erodes away short-term profit, leading to accurate pricing of the stock?
      - hp50g 14y ago
        Good questions. A failsafe/circuit breaker is a possibility but shutting down the market will affect confidence. I'd prefer to see a market operate on a tick basis I.e all trades for a tick are transacted in one go with a window between each tick and assertions before and after the tick processing. Fair point with your second comment.
  - omi 14y ago
    HFT doesn't provide liquidity, it provides volume which is not the same thing as liquidity. Think churning the same 100 shares a 1000 times. Since market participants assume that the volume they see is liquidity, when they try to execute larger orders, and BAM! (this happens with single large orders as well as a dump of 100 lots) the floor just vanishes from them as machines just turn off for some time while someone liquidates a position and tries to find ACTUAL buyers.
namwen 14y ago
Wasn't this mostly stopped in NY when the Exchange set up a server building and allowed firms equal access? They had been buying up the real estate around the exchange for amounts much high than the property's value and it was becoming a bit of a problem. Now they are all in the same building and everyone has the exact same amount of cable running from their server to the exchange.
- stumm 14y ago
  Changes in commodities prices in Chicago will have "known" affects on stock prices in NYC. If you can get the information between the two cities faster, then despite this equal access in the last leg you can still take advantage of knowing before the others.
- evanb 14y ago
  This move halted the land rush around the fiber access points in New York. But suppose a firm trades both on the NYSE and CHX in Chicago. If there's a price difference on the same stock in the two exchanges, you can buy low and sell high for a brief period (a few ms): if your machines in the NYSE building and CHX building can communicate that price difference faster than anybody else, nobody knows there's a discrepancy to be taken advantage of.
nano111 14y ago
nanoseconds it's where it's at on wallstreet

arethuza 14y ago

And in another case - $1.5 billion to move London 60ms closer to Japan: http://www.extremetech.com/extreme/122989-1-5-billion-the-cost-of-cutting-london-toyko-latency-by-60ms http://www.extremetech.com/extreme/122989-1-5-billion-the-co...

hp50g 14y ago

(for the moment). HFT will eventually fall off a cliff or be regulated out of existence. I think the FSA in the UK are on this already.

coob 14y ago
Why would it be regulated out of existence? Does it not provide large amounts of liquidity?
- hp50g 14y ago
  It does but there are some real downsides: Failures can cause exchange crashes big time. This has nearly happened a few times before. Risk is centralised and multiplied. HFT contributes to volatility. Hurts long term investment by human brokers.
  - michael_miller 14y ago
    To play devil's advocate: - Can't failures be counteracted by having failsafe measures? For example, if the market goes down more than 5% in a few-minute period, the market temporarily shuts down for a cooloff period of several hours to diagnose what's happening. - Isn't HFT irrelevant to long term investment, given that it erodes away short-term profit, leading to accurate pricing of the stock?
    - hp50g 14y ago
      Good questions. A failsafe/circuit breaker is a possibility but shutting down the market will affect confidence. I'd prefer to see a market operate on a tick basis I.e all trades for a tick are transacted in one go with a window between each tick and assertions before and after the tick processing. Fair point with your second comment.
- omi 14y ago
  HFT doesn't provide liquidity, it provides volume which is not the same thing as liquidity. Think churning the same 100 shares a 1000 times. Since market participants assume that the volume they see is liquidity, when they try to execute larger orders, and BAM! (this happens with single large orders as well as a dump of 100 lots) the floor just vanishes from them as machines just turn off for some time while someone liquidates a position and tries to find ACTUAL buyers.

namwen 14y ago

Wasn't this mostly stopped in NY when the Exchange set up a server building and allowed firms equal access? They had been buying up the real estate around the exchange for amounts much high than the property's value and it was becoming a bit of a problem. Now they are all in the same building and everyone has the exact same amount of cable running from their server to the exchange.

stumm 14y ago
Changes in commodities prices in Chicago will have "known" affects on stock prices in NYC. If you can get the information between the two cities faster, then despite this equal access in the last leg you can still take advantage of knowing before the others.
evanb 14y ago
This move halted the land rush around the fiber access points in New York. But suppose a firm trades both on the NYSE and CHX in Chicago. If there's a price difference on the same stock in the two exchanges, you can buy low and sell high for a brief period (a few ms): if your machines in the NYSE building and CHX building can communicate that price difference faster than anybody else, nobody knows there's a discrepancy to be taken advantage of.

nano111 14y ago

nanoseconds it's where it's at on wallstreet