60 ms cross-continent

Sun Jun 21 18:38:21 UTC 2020

On 6/21/20 1:53 PM, Brett Frankenberger wrote:
> On Sun, Jun 21, 2020 at 02:17:08PM -0300, Rubens Kuhl wrote:
>> On Sat, Jun 20, 2020 at 5:05 PM Marshall Eubanks <marshall.eubanks at gmail.com>
>> wrote:
>>
>>> This was also pitched as one of the killer-apps for the SpaceX
>>> Starlink satellite array, particularly for cross-Atlantic and
>>> cross-Pacific trading.
>>>
>>>
>>> https://blogs.cfainstitute.org/marketintegrity/2019/06/25/fspacex-is-opening-up-the-next-frontier-for-hft/
>>>
>>> "Several commentators quickly caught onto the fact that an extremely
>>> expensive network whose main selling point is long-distance,
>>> low-latency coverage has a unique chance to fund its growth by
>>> addressing the needs of a wealthy market that has a high willingness
>>> to pay — high-frequency traders."
>>>
>>>
>> This is a nice plot for a movie, but not how HFT is really done. It's so
>> much easier to colocate on the same datacenter of the exchange and run
>> algorithms from there; while those algorithms need humans to guide their
>> strategy, the human thought process takes a couple of seconds anyways. So
>> the real HFTs keep using the defined strategy while the human controller
>> doesn't tell it otherwise.
> For faster access to one exchange, yes, absolutely, colocate at the
> exchange.  But there's more then one exchange.
>
> As one example, many index futures trade in Chicago.  The stocks that
> make up those indices mostly trade in New York.  There's money to be
> made on the arbitrage, if your Chicago algorithms get faster
> information from New York (and vice versa) than everyone else's
> algorithms.
>
> More expensive but shorter fiber routes have been build between NYC and
> Chicago for this reason, as have a microwave paths (to get
> speed-of-light in air rather than in glass).  There's competition to
> have the microwave towers as close as possible to the data centers,
> because the last mile is fiber so the longer your last mile, the less
> valuable your network.
>
> https://www.bloomberg.com/news/features/2019-03-08/the-gazillion-dollar-standoff-over-two-high-frequency-trading-towers

... and similar to this: 
https://www.extremetech.com/extreme/122989-1-5-billion-the-cost-of-cutting-london-toyko-latency-by-60ms

>
>       -- Brett