Monday June 17, 2019

Warning: Use of undefined constant sfire_topic_count_text - assumed 'sfire_topic_count_text' (this will throw an Error in a future version of PHP) in /nas/content/live/nyconvergence/wp-content/themes/nyconvergence-3/functions.php on line 188

High-Frequency Traders’ Sights Set on Microwave Dishes

Shrouded microwave relay dishes on a communica...

Shrouded microwave relay dishes on a communications tower in Australia. (Photo credit: Wikipedia)

Trading firms are racing to build groups of microwave dishes to generate higher-speed links between financial markets in Chicago and NY, as reported by The Wall Street Journal. A majority of telecom traffic will have to travel between these regions, and the cellphone towers that run along the roads and highways here are the main sights for a telecom boom.  The owners of cell towers, such as TowerCo LLC, have the opportunity to make immense profits on these properties.

According to the Journal, trading firms that have long relied on fiber-optic cables, are trying to get an advantage by building these microwave relays. In recent months the FCC has had filings from ten different firms for these networks. These increased communications are part of an effort to energize communications between financial hubs. Some companies have pegged the big profits in selling speed to banks and trading firms, while others say that most networks could never keep up with the rapidly growing technology.

Richard Elliott, head of trans-Atlantic cable owner Apollo Submarine Cable System Ltd., told WSJ that, “It becomes something of a grim arms race, with each successive millisecond [of speed] costing more than the last.”

Spread Networks LLC spent $300 million to bury a fiber-optic cable between NY and Chicago that cut only three thousandths of a second off communication time, according to the WSJ. The emerging microwave signals threaten to undercut the profits from fiber-optics. Microwave networks can travel faster than fiber-optic cables in some cases, and because cell towers are tall enough they have become top locations for microwave dishes.

The problem with these cables is that they are less reliable, and carry less information than other forms of communication. The advantage of extra seconds gives traders the opportunity to exploit the differences in pricing of securities between the two cities. The WSJ reported that trading firm, Tradeworx Inc. said 2.3 milliseconds saved is worth $1,350 a day for a trader trying to profit from price differences in the S&P 500 futures in Chicago and NY. Tradeworx is offering a feed of futures-market data to outsiders for $250,000 a year.

This race to build microwave networks is part of a movement towards telecom investment. There have been issues though, one of which is the difficulty in securing airwave rights needed to send signals between two cell towers on the path between NY and Chicago.

The Wall Street Journal (subscription require)


  • Microwave dishes are not the only thing High-Frequency Traders have their sights set on.
    Mexico Takes Huge Steps To Boost Its Position In High-Speed Trading Market: http://www.wallstreetandtech.com/exchanges/231903373

  • Golden Networking

    Come to High-Frequency Trading Happy
    Hour and Join Hedge
    Fund, Alternative Investments, Private Equity, High-Frequency, Algorithmic and
    Proprietary Trading Managers, Investors, Executives and Professionals From the
    Most Prestigious Firms for Networking, Cocktails and a Unique Presentation:
    HFT in China: Mirage or
    Reality, from 6PM to 9PM, June 13


    For more
    info: http://www.hfthappyhour.com/

  • Pingback: Didactic Syncast #64: Microwaves and Kafka « Didactic Synapse()

  • GoldenNetworking

    Edgar Perez, author of The Speed Traders, will be leading the seminar The
    Speed Traders Workshop 2012 Mexico City, “How High Frequency Traders Leverage
    Profitable Strategies to Find Alpha in Equities, Options, Futures and FX”, on July
    27th. The Speed Traders Workshop 2012 will open the door to the secretive world
    of high-frequency trading, the most controversial form of investing today, and
    reveal how high-frequency trading players are succeeding in the global markets
    and driving the development of algorithmic trading at breakneck speeds from the
    U.S. and Europe to India, Singapore and Brazil.

    More info at: http://bit.ly/KiHSag