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$300M To Save 6 Milliseconds
whoever57 writes "A new transatlantic cable (the first in 10 years) is going to be laid at the cost of $300M. The reason? To shave 6ms off the time to transmit packets from London to New York. The Hibernian Express will reduce the current transmission time — roughly 65 milliseconds — by less than ten percent. However, investors believe the financial community will be lining up to pay premium rates to use the new cable. The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund."
To suck American's and other peoples' money out of their wallets from overhead. Same basic effect.
now they can lose money even faster!
This is what happens when money is kept artificially scarce by bankers, and allocated only to their friends. Govt should remedy the injustice by creating more money and giving it directly to the ppl by, for, and of whom the govt exists.
Just imagine how much better gaming will be w-- oop, nevermind, just got headshotted by a chinese / russian sniper again.
Slashdot is serious business. You Brits will do anything to get first posts!
This kind of thing is the direct proof that the way the stock exchange is built is deeply flawed. Why don't they try to build it on sounder bases than "the fastest takes all" ?!?
Non-Linux Penguins ?
"...The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund."
I think we now have real proof that life is moving too fast when the metric to measure your performance as a large hedge fund investor is now measured in single milliseconds.
I'm glad I'm not a large hedge fund investor. Think your 30-minute lunch break is shitty? These guys don't have time to blink.
http://www.ted.com/talks/lang/eng/kevin_slavin_how_algorithms_shape_our_world.html
Its about time that the speed of trades between them be internationally mandated to say, a bloke with a forked stick. The uniform might be appropriate too...
All this high frequency stuff is not investing. There should be a random 0-1 second delay in the execution of all trades and a $.0001 tax on each transaction. Level the playing field again.
At least the high frequency trading mess is leaving some usable wreckage behind that's a lot more then you can say about most of the financial institutions innovations.
"Only" a few milliseconds? Do you realize that's trillions of femtoseconds? Twenty thousand femtoseconds for each otherwise worthless dollar. Get some perspective man!
Investing has always been about timing. If the timing is right, here is what happens...
Individual 1: Buys 100 shares for $10,000. Long term investment to make 5% a year.
Individual 2: Receives $10,000 from Investor 1 for 100 shares. Spends $9,500 for 100 shares. Makes 5% in a days.
Individual 3: Receives $9,500 from Investor 2 for 100 shares. Spends $9,025 for 100 shares. Makes 5% in an hours.
Computer 1: Receives $9,025 from Investor 3 for 100 shares. Spends $8,573.75 for 100 shares. Makes 5% in minutes.
Computer 2: Receives $8,573.75 from Computer 1 for 100 shares. Spends 8,145.06 for 100 shares. Makes 5% in seconds.
Computer 3: Receives $8,145.06 from Computer 2 for 100 shares. Spends 7,737.81 for 100 shares. Makes 5% in milliseconds.
==
Individual 1 receives 100 shares. $2,262.19 was skimmed off along the way.
Imagine how much more money they can make with microsecond, nanosecond, even picosecond speed trading.
This 1ms advantage is worth 100m USD, isn't relevant to transatlantic bandwidth.
The quote from wikipedia https://secure.wikimedia.org/wikipedia/en/wiki/Low_latency_(capital_markets) is
"A 1-millisecond advantage in trading applications can be worth $100 million a year to a major brokerage firm, by one estimate."
I can't find the original source of this - but IIRC its from the CTO of someone like Goldman's or BoA.
If you are doing high frequency trading on a NY or London based exchange, you don't buy the lowest latency connectivity from the exchange to you. You put your systems as close to the exchange as possible AND THEN you buy the lowest latency connectivity from the exchange to you. Your systems which trade in NY are based in NY, and your systems which trade in London are based in London.
I'm sure there is some minor advantage of NY and London being slightly closer together from a latency perspective, but I'm sure its not as much as 100M USD.
Alex
Don't you think, though, that the people investing $300m in this cable have thought a little bit about their business model and believe it to be sound? Clearly those 6ms are really valuable to some people, and if not high frequency traders then who?
The entire finance sector fills me with equal parts revulsion and sadness. This is yet another example of enormous resources consumed for no net gain to society. At least in this case something (however unnecessary), tangible is produced as a result. Think of the huge numbers of brilliant mathematical and programming minds that have been consumed by this nonsense! Think of the resources and financial liquidity that is reinvested into this zero sum game! Every hour of work, every employee, every structure erected in praise of this wholly disgusting idol of modern nihilism, makes the rest of our society just that little bit worse. To those who would praise the enabling power of our new financial systems I say Pah! We can create better financial systems within virtual worlds. The only intrinsic value in the financial institutions is the power it gives; and this has been abused for all it is worth! Give me back my engineers! Give me back my scientists! Give me back my hope for a better future!
The reason why a low latency connection is valuable is than many identical stocks and commodities are traded in both NY and London. If you are the first one to detect a pricing difference you can make a sure profit.
Because it is made of "Monster" cables . . . http://www.monstercable.com/
However, investors believe the financial community will be lining up to pay premium rates to use the new cable. The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund.
So obviously, a cable made of "Monster" cables will be worth* even more! Roll out your checkbooks, all you unfeasibly large hedge funds!
*Your actual worth is subject to local regulation, taxes, palm grease, wind velocity of an unladen swallow, global warming, sea temperatures, etc . . .
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
Well, for someone trading in both Europe and the US it would probably make sense to have the lowest possible latency between their own systems to coordinate trading.
Now, if this would be worth $100M I don't know. But it does kind of make sense if you want your different systems to communicate with each other.
Greylisting is to SMTP as NAT is to IPv4
The should of course have slant drilled a tunnel from NY to London instead, making the cable even shorter.
If my comment didn't sound as good in your head as it did in mine, then I guess we all know who's to blame
Yep, this. GP missed the point, but, at the same time, I too am sceptical about that $100m/yr figure...
gamers!
If you're in London and you know 6ms before anyone else that the price of oil in New York just shot up, you can buy oil right now and then sell it in 6ms for a tidy profit.
There was a great article in JavaWorld on the "quest for latency" a while back:
http://www.javaworld.com/community/node/7495
now they can take everyone else's money even faster!
FTFY.
I dream of a nation where a man is not judged by his skin color but by an number assigned by a credit rating agency.
Sadly, the high speed trading for which this is designed is a zero sum game - the extra dollars made by the hedge funds are shaved off someone else.
Banking has a very valid job to do: transferring money from savers to borrowers, aggregating small savings into large investments, and ironing out risk by spreading it over many loans. But these are, fundamentally, decisions made by humans, and such decisions will be made on timescales of, at the fastest, a minute or so. In order to ensure liquidity, and to even out large lumps in the trading,it is useful to have automated system which work on a timescale which is, say, ten times faster. Such banking and trading adds value. and it the reason we need banks. But any trading faster than that is purely profiting from irregularities in the system, and adds no value to the world. So any value extracted by the traders, or used to build links for such traders (as described in the article) is money wasted: a net loss to humanity.
I would like to put a drag on such trading: one which would dissuade high speed trades while not harming legitimate trades, including legitimate spreading of large risks. A nano-tax might do it - and the premium traders will pay to use this cable suggests the magnitude of such a nano-tax.
Consciousness is an illusion caused by an excess of self consciousness.
Indeed. And it is really no problem to remotely administrate such a system close to the exchange. The reasoning given in the article is flawed. That said, the lower delay and additional redundancy can be worth a lot.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
This has been their plan all along. Get Gold Man-Sacks to pay for world-beating ping-times.
Screw hedgefunds, those guys are going to rule in deathmatch mode.
When information is power, privacy is freedom.
How much for on of those neat ROV's to cut the line?
Just asking the logical question here, if they are going to upgrade the weapons stealing from the people, why not just destroy the whole thing?
Oh hey look over here, only $34k , (I wonder if we can rent one)
now off to find a 50 Watt underwater SAW ....
Wouldn't it be funny if HFT traders stole everything so well, that nobody was left to trade since everyone is in destitution. Time it so everything goes to Zero.
Alternatively, Cut the line at the right time.
by yours truly in 'DailyKos
Arbitrage
This ^^
... Greed and fear are the driving forces of humanity now. The only thing you and I as "mere mortals" can do now is watch until the final collapse.
Religion: The greatest weapon of mass destruction of all time
Every MS helps to those battlefield3 servers, bullets are fast.
I need every ms too.
Liberty freedom are no1, not dicks in suits.
So if using this connection gives $600M advantage a year over those that aren't using it, everyone will simply start using it. That way nobody will have the advantage and it's back to square one - only everyone be paying extra for the faster connection.
Only dumb birds land downwind.
Then why cant we have zero percent taxes. And the govt can 'create out of thin air' the money they need.
If they require 10% of GDP, then print it, dont steal it.
Id be happy with 0% taxes, and 10% inflation.
Simple, run it in Sims and see how you go.
Liberty freedom are no1, not dicks in suits.
If milliseconds REALLY mattered to the tune of 100M for a large hedge fund, I would expect that the fund managers would buy the building next door to the stock exchange and put there servers at the edge of the property as close to the data entry point. The 'value' of high frequency trading (HFT) just doesn't support this.
And for that matter, like it's be stated elsewhere, HFT is really just a scam to suck money out of normal people's pockets. I appreciate the value that speculators add to our economy: these people are the global insurance policy. HFT doesn't insure anything for more than a few fractions of a seconds.
that 100m per year assumes that one single hedge fund gets all the advantage from the cable.
but it's ridiculous that ping matters more in betting than in wow.
of the exchanges.
Only the masters of artificial wealth would complain that high frequency trading is a benefit to anyone instead of a very dangerous and slippery slope (Tuesday morning alliteration - ye Gods and little boarlets...)
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How can high-frequency trading suck money out of people's accounts if those people aren't selling? Isn't the whole point of buy-and-hold that you can ignore the daily fluctuations in favor of the long term? After all, the high-frequency nature of HFT means that every tick down (when they short) is quickly neutralized by the impending tick up (when they cover). They can't push the price down and keep it there for long -- their goal is to make a quick profit. Crashing the market requires a mass selling of long positions. A mass shorting, on the other hand, can only last so long before everyone needs to cover. Note that I'm not arguing for or against HFT. I'm simply pointing out that what they do doesn't impact you (permanently at least) if you're a buy-and-hold type.
It's classic arbitrage - and this is how it works.
There are a lot of things that trade in both New York and London. Think gold, oil, stocks (BP, etc) and there is a portion of each day when both are open.
If BP is trading in New York for $1.00 and BP is trading in London for .6.34 pounds, and the USD/GBP is 1 to 6.33 a trader could squeeze out a penny by buying BP in NY and selling in London. It keeps the price in sync between the 2 markets.
Good enough for another couple of milliseconds!
But this also adds more bandwidth as well right? as well acting as a back up for other cables.
Diary of a Very Bad Year, by Anonymous Hedge Fund Manager
The Asylum, by Leah McGrath Goodman
The Big Short by Michael Lewis
-- interviews with real people who know how real hedge funds actually work in the real world, not the fantasy land of milton friedman and ayn rand.
This new cable runs Gentoo instead of <scoff>binary-only unoptimized distros</scoff>.
Just like in the 70s(?) they convinced the world that Howard Hughes' Glomar Challenger was meant to extract maganese nodules from the ocean floor when actually it was to raise a Russian nuclear sub.
So what use could the CIA/NSA/DoD have for a very low latency/high bandwidth pipe? Methinks they want to reduce the latency of their aerial drones and soon-to-be revealed robot army.
Either that or this is another reason why China will inherit the earth.
there is a wikileaks cable about how Canada had a 'withholding tax' that prevented US banks from creating CDOs out of Canadian assets.
their argument? This awful tax 'reduced liquidity' in Canada.
it also saved Canada from an economic meltdown. 'liquidity' is another word for 'garbage laden toxic assets that have been AAA rated through fraud and corruption'.
when will 'economic theorists' understand that your theories mean absolute shit? the crisis of 2008 destroyed practically every lie of the corrupted, conflicted pseudo-science academic economists. 'liquidity uber alles' being one of the main ones.
its like you are screaming that Mercury follows a kepler orbit. no, it doesnt, and saying that it does is ignorant and wrong.
Perhaps you can illuminate us on what the point is. Alex sounded informed and well thought out to me.
Listen to their VP of Business Development when asked how many mS in a second (starts at 0:23:00) http://www.bbc.co.uk/programmes/b014f7g7
Just like in the 70s when the CIA used Howard Hughes' Glomar Challenger to try to raise a sunken Russian nuclear sub (they said they were getting Maganese nodules from the ocean floor).
If not this is another reason why China is going to inherit the earth. (We're putting money towards non-productive uses for society as a whole, never mind what the Hedge fund owners make).
You'd be so fast that you would make Slashdot's first post EVERYTIME!!!!!
I mean,,,,COME ON
Oh, for want of a lit cigarette...
http://boston.cbslocal.com/2011/09/12/lowell-gas-station-attendant-hoses-robbery-attempt/
1817 : Major Brokerage leases building on Wall ST!
1836 : Major Brokerage house installs first telegraph!!
1890 : Major Brokerage house installs first telephone!!!
1990 : Major Brokerage house has access to internet!!!!
Sound investing is based on research but it is also based on the ability to react quickly to that information. If a company in the US announces that their CFO has been indicted, then investment firms in the UK are definitely going to pay to get that information and react to it as quickly as possible. Before you could submit bids to the fed electronically, investment firms used to place runners in pay phone booths next to the Fed so they could call them at the last minute and have them get in the best bid. Fundamentally, there is no difference between that and this.
And yes, "black box" high-frequency traders are going to be the primary users of this line but that doesn't mean there aren't valid and legitimate (as far as the average consumer is concerned) uses for this line.
My thoughts exactly. Everyone is complaining about how bandwidth is becoming more and more scarce, new cable should mitigate that as well, right?
We have customers who trade electronically who want to colocate in racks physically next to ours just to shave milliseconds on transaction times.
http://www.youtube.com/watch?v=TDaFwnOiKVE
If their low latency is worth that much money, I doubt the prices they charge will make the cable usable for bandwidth or as a backup.
by yours truly, here .
I just read an article in Popular Science that almost made me sick to the stomach. The headline says it all "Pricey Transatlantic Cable Could Save Milliseconds, Millions by Speeding Data to Stock Traders".
Here is $400M being spent just to give flash traders a 5 ms advantage in trans-atlantic trading. It adds nothing to the economy, just lets the Wall Street Casino operators skim more money from the economy. I addition, it diverts talent from productive projects.
Never has Matt Taibbi's description of Goldman Sachs, and by extension, all the big banks, as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" seem even more apt.
This is huge for arbitrage markets where you want to have a server close to more than one exchange (i.e. NYMEX/CME in New York and IPE in London.) Example is the spread between WTI and Brent crude is very actively traded. You can do this trade on legs (individual flat price trades on each side) or outright as a contract. Black boxes are scalping that all day long. A 6ms advantage means you can take advantage of market inefficiencies between the two exchanges before other people can, huge benefit. Heck there is even a WTI contract on IPE and one on the CME, that is a very scalpable market with the right setup.
What about the legal implications? I imagine that having your actual physical tradeing system in London vs New York makes quite a difference where taxation and regulation are concerned.
This is actually huge news for the financial companies.
Most people don't really understand what these companies do. Ethics aside, these prop shops do largely automated trading based on extremely propietary software that monitors market conditions, news, weather, politics, etc all at the same time. It would have to be a huge hedge fund (not a smaller prop shop) to shell out $100M unless they thought they would have an advantage because nobody else could afford it. But yes, the basic premise of cuting 6ms off the time and having financial companies beating down their door to sign up for service is absolutely correct. If you can make a large trade 1ms before your biggest competitor so that you buy in cheap and they buy in higher or cancel their trade, then you can make big money. There's a whole industry creating products for these low latency trading firms with specialized switches, routers, software, etc that is tuned to support extremely low latency networks and zero dropped UDP packets.
Great points! If you have to add capacity you look for a way to differentiate yourself from competitors and this would be a great way to do it. The fact is that 65 milliseconds has markets ready to be exploited. Seeing how the lifecycle of the cable will likely see a ROI many times over this also strikes me as a "quick win" to gain customers right off the bat. Eventually something faster will come along but by then, hopefully, the utility of the investment has proven itself to all involved.
This really means that you can make imaginary money faster. Something is wrong when you can create wealth by being a little faster than the next guy.
I don't really see how this adds anything to the overall value. The extra bandwidth will be nice. This will mean that researchers and other people who are actually trying to contribute to the world and do real work can get more bandwidth.
The financial guys that are making imaginary money can go play somewhere else.
For £200 million you could build a ship park it in the middle of the Atlantic and get a 30ms advantage over servers located on either shore. no its not my idea :-(
When I'm king, I'm going to solve this problem. No more short term capitol gains taxes, because there'll be no more short term capitol gains. How? I'll impose this one rule: Any stock, bond, security, whatever, has to be held for at least one year before it can be sold. There's no end of problems this one rule will fix. When I'm king. Oh well.
Co-location
Someone forgot to do their market research...
Is this project taking advantage of government internet grant money?
I'd be pissed if the taxpayers were footing the bill for this.
All your fancy Wall St. crimes are fundamentally just legal hocus-pocus that enable traders to legally lie about an investments risks.. or insider trading. Yes, chopping up mortgages beyond the S&P's regulatory ability requires computers, but.. raw speed is basically irrelevant to white collar criminals.
Arbitragers otoh aren't robbing people, crashing the markets, etc. Instead, their speed demon approach reduces the bid ask spreads for everyone, largely because so damn many people are playing the arbitrage game.
In fact, all this hate targeted towards the raw speed aspect of Wall St. might have disastrous consequences, namely it might enable the big boys to buy regulations that kill off the small to mid-sized arbitragers, increasing spreads and pumping money directly from pension plans into their pockets. Wall St. has managed surprisingly well to avoid forming monopolies. Let's keep it that way!
I'm not making a moral judgement, but this is Darwinian Evolution at work. It isn't survival of the fittest, it is the pressures of survival on all.
A lot of you are no-nuke people, but the Internet was built to survive nuclear war. We win.
Many of you, including myself, don't support greed, but it is the financial incentive to speed up network speeds, lay new lines, and expand the networks. We win. Should a disaster happen, the Internet will have to overcome lost lines or malfunctioning satellites. Imagine if we had to route via China just to reach London, Ee-gads!
When the money depends on the network, governments will protect their big interests, and be less likely to sever the lines. Again, we win.
I8-D
this was posted earlier this year. On point, still.
The standard explanation proffered by the HFT owners and customers is they "add more liquidity". This is repeated so many times that laypeople buy it; see typical comments in this thread like "we have traded wider spreads for higher instability" [slashdot.org]. This is not the entire story: the liquidity is for them, not for you . That there is sometimes a spillover liquidity and spread improvement for participants in the wider market is merely a convenient observation suitable for PR. The past and ongoing flash crashes demonstrate that when the liquidity trades against them, they pull this vaunted liquidity quicker than you can blink, literally. They're not going to leave money on the table supplying liquidity into the market if they don't have to.
Another oft-made claim is "anyone is welcome to do what we do, there are no barriers to entry". That is not quite the entire story as well. The defining feature of an HFT firm over the retail investor apart from scale (you need accredited investor-scale financial depth just to ante up the money to the exchange to cover their risk for you fracking up your code and making market on your fracked up orders they then have to make good upon) is access, as the articles this story links to amply documents. They are quite different from most market participants. While it is true that one doesn't have to have special institutional privileges and access to buy these newfangled digital-age "exchange seats", and "merely satisfying" some financial and technical criteria make these seats putatively easier to obtain than the old seats, make no mistake about it, they are more privileged than the old school NYSE exchange seat holders: they enjoy special access to the markets that "non-seat holders" do not, namely preferential positioning in the order flow inspection pipeline, or put another way, they enjoy market making access without market making responsibilities. Just because you no longer have to have a hallowed name descending from the Mayflower, a family history intertwined with the exchange, and an imposing granite edifice for offices to qualify for an exchange seat that buys access to the order flow doesn't mean that preferential access is open to everyone. The day the exchanges open up the HFT level and quality of tick access for the same price as 15-minute delayed ticker quotes, would be the day that I withdraw this observation.
If you chafe at these new special breed of privileged market participants, then an old school remedy is still available: with privileged market access, comes market making responsibilities and market making regulatory oversight. Perhaps not as much responsibility as the exchanges, but definitely more than those without the preferential access, commensurate with their impact upon the market as shown by the flash crashes. Let them have the special access, but make good on the liquidity and spread claims with regulatory enforcement; that is, they continue eating at the trough even when the liquidity and spread moves against them. It didn't stop the old school market makers from coming up with different licenses to print money, so they'll still make great bank (though they'll bitch like a platoon of coked-up noob IB's at Penthouse for having to run through regulatory hoops that didn't exist before, instead of spending that time cranking the next batch of algorithms onto FPGAs), but coupling privileged market access with market making responsibilities did truly impart long-term benefits to participants in the wider market. Arguable if the benefit was proportional, but as long as we will tolerate differential access, we might as well at least maintain the marginal benefits of status quo ante, eh?
I would assume that the issue is moving capital between markets quickly, if trading programs spot a good selling deal in New York, then a good buying deal in London 10ms later, then they are probably racing against each other to get money across the Atlantic.
A pizza of radius z and thickness a has a volume of pi z z a
Don't you think, though, that the people investing $300m in this cable have thought a little bit about their business model and believe it to be sound? Clearly those 6ms are really valuable to some people, and if not high frequency traders then who?
You don't know many people in the financial sector, do you?
"I zero-index my hamsters" - Willtor (147206)
High speed trading is front running. They get to see a trade coming in for a very short time and use that information to their advantage. Pure theft. Cant understand why there are no pitchforks.
So they'll get it to 61ms. The speed of light from London to New York is 18.6ms by my calcs. Can anyone summarize as a list of the major percentages what makes up the rest of the 40ms?
Why OpalCalc is the best Windows calc
Yeah, that's my thought. Who cares who it's being built for, ARPANET wasn't met for us civvies but we still reap the advantages. A new 6ms faster cable is excellent, 6ms is an eternity to a computer, it's progress, who cares if for the first few years they get their ROI from Bankers?
Map of the cable.
One would think that if it were actually worth $100 million/year to a trading firm that they would have run their own cable and not allowed access to their competitors. Of course that would mean they would have to own some actual assets rather than just piles of play money, and a three year ROI might be unacceptable to people who expect to make a gazillion dollars a month for doing essentially nothing, so perhaps that's not such a valid guess after all.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
Actually, the way this likely adds value is to arbitrage the two exchanges. There are shares that trade on the London exchange that have ADRs (American Depository Receipts, which let you invest in a foreign company in dollars) and with extremely low latency, you can get the new price (after someone buys or sells) on the London exchange before everyone else can see it in NY, and then buy or sell the same shares accordingly on the NY exchange, for a risk free profit. You sell the expensive one (eg $1.01 a share on FTSE) and buy the cheap one ($1 on NYSE). This is just one example; most of what is going on is information arbitrage with public information, just happening at speeds so fast that no regular trader or investor can compete.
1) People are spending their own money on a risky venture that they believe will not only recoup their costs, but also allow them to make additional money in the future.
2) People are building an additional trans-Atlantic line that will provide increased capacity and lower latency to the market.
3) People are paying for the opportunity to locate price asymmetries in the global market and profit by bringing them into equilibrium.
4) No public funds are being used.
Which of these statements are people posting here having the most difficulty with? Is making money, creating value, decreasing price information latency, and keep one's hands out of the public till considered bad? Which part?
I can't tell if the people here are serious or idiots.
-Hope
Somalia famine: UN warns of 750,000 death, but hey, 6 ms.....
I bet you use a credit card regularly? or even a debit card? If so, stop supporting the financial companies you despise.
High frequency trading is a zero sum game. Eventually, the losers will exit the market, and then winners will have no one to trade with.
I heard an interview on BBC Radio 4 with Mike Saunders, of Hibernia Atlantic.
He claimed that there were 100 000 milliseconds in a second. Listen to it.
http://news.bbc.co.uk/today/hi/today/newsid_9588000/9588512.stm
What was worse was that none of the news presenters in the studio called him on it.
Perhaps it may be related to this?
http://en.wikipedia.org/wiki/Arbitrage
but if all the financial institutions jump off the old cable on to the new cable, then the old cable may have to reduce their prices.
Is 1563649 a prime number?
I find the overwhelming disgust expressed in the comments a bit misguided. Considering that a large number of /. readers are involved with the tech industry I would think they would be happy with an investment o this sort. The money doesn't just disappear, it goes into communications infrastructure, undersea construction and all the R&D associated with these.
I guess that rules Mars out as a location for "Financial Services".
My Battlefield 2 skills are *still* epic and no ping will save your buttocks.
I swear to God...I swear to God! That is NOT how you treat your human!
http://www.ted.com/talks/kevin_slavin_how_algorithms_shape_our_world.html
Yeah, I was wondering about that. It seems like the value of lower latency would have a 1/x type of distribution, so the difference in relative value of connection A with latency 1/x vs. connection B with latency 1/(x - y) (where x > y, obviously) would be much larger for smaller x. So, if you're talking about a 6ms advantage relative to a base latency of, say 20ms-30ms, it's a much bigger deal than a 6ms advantage relative to a base latency of 64ms.
Sure, these schemes are playing on arbitrage opportunities, but the fact of the matter is that someone in New York that shaved his latency from 64ms to 58ms to London still has a pretty big disadvantage compared to someone already in London that has a latency that's probably a third of that or less.
Program Intellivision!
All transactions should be subject to a delay of upto 500 ms. To put an end to this cocaine fueled algotrading.
People have wanted faster news for centuries, so I don't see why people are shocked that they still want it now. Reuters got started when Julius Reuter figured out that it was faster to send stock quotes by carrier pigeon than horseback, then when telegraphs arrived, Reuters switched to that. Going back farther to US colonial times, I read that someone set up a series of signal fires between New York and Philadelphia, to get faster notice in Philadelphia of a ship arrival in New York. I wonder if some people at the time tried to ban the signal fires as unfair.
There really should be a minimum time that you must own stock & futures. Right now it is just all games and millisecond gambling. I mean really if you only own the stock for 1/10th of a second, why do you care if the company is doing good or failing. And if you can sell futures before they mature, how does that in any way relate to the real product that the paper represents.
Non voting stock should have a minimum 3 month ownership, if you buy stock in a company, you shouldn't be able to sell it again for a minimum of 3 months.. This would cause investors to actually investigate the stock they are buying.
And futures must be held till they come due.. If you are buying oil futures 6 months out, the actual value of the oil 6 months later should be what will determine if you gain or lose money.. You shouldn't be able to sell those futures before then.
That would put some stability back into the markets.
Of course I am just a layman and have no experience in the actual markets.
A man from Hibernian Express was on the "Today" programme on BBC R4 yesterday morning and was clearly surprised to be asked how many milliseconds there are in a second. After a bit of flapping he declared there were 100,000.
I know the truth and I know what you're thinking
Apparently, time is money.
I'm here all week. Try the veal.
I suggest turning this realtime roleplaying game into a turn based one. Processing actions once a minute oughta do it.
"The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund." ??? Rather $100m per day. Investment brokers make billions of dollars every day from simultaneous transactions (buy at one exchange, sell at the other, absolutely risk-free). Every ms shaved off makes this business model more successful. Of course society is the loser of all of it, since in effect, no capital is raised or used in any productive way. The profits come on the backs of all the investors that cannot afford the play on the market like this. Since the net benefit to society is negative these kinds of trading practices should be prohibited by law.
It's not about the milliseconds, it's about capacity. We need more capacity across the big pond. That it shaves off a few milliseconds is great but that's beside the point. and BTW it's sickening to hear that the stock markets would auto-trade like this.
For years I used to joke that if mankind ever does discover FTL, it'll be some computer chip maker trying to make CPUs faster.
I've changed my mind. It will be by some financial trading company trying to squeeze a few more milliseconds off a long distance transaction.
-- Alastair
Set your watch ahead by 6 ms.
For some reason it didn't show up in My Account so I thought "someone" (the CIA?) was preventing me from posting my crazy conspiratory theory! ;)
I'd think that the return on time savings is nonlinear. Once you get beat by your (closer in) competition, its not really worthwhile saving a few milliseconds to not get beat quite as badly.
Their money would be better spent on a co-location site. If this nonsense gets out of hand (everyone trying to get closer to the exchange servers), I think the SEC should extend the Fair Disclosure regulations to this issue. Dictate a minimum length of fiber optic cable between exchange and client data centers.
Have gnu, will travel.
The bandwidth problem is in the "last mile" between the ISP and it's customers, and in the wireless spectrum. The ISPs designed for a "consumer" network where you download content like their digital TV offerings. Unfortunately for them (and us), they got a "peer serving" customer base, where everyone shares with everyone else.
There's no problem with transatlantic bandwidth. A large amount of existing optical fibre is dark anyway, and we're constantly figuring out new tricks to cram more data through what we have already.
It does add some redundancy, but that's about all it's value to the common man. Given that bandwidth on this cable is going to charged at a premium, it may be unlikely that you'll see traffic from consumer ISPs crossing it.
They are really charging for the low latency - in bandwidth terms it's probably going to be undersubscribed. They might sell excess capacity while reserving some channels for low-latency comms, but they'd have to build in some kind of store-and-forward artificial latency buffer or any idiot will be able to get their premium services.
Net neutrality would kill off projects like this, because people will not be able to charge extra for low latency. Special low latency, extra reliability lines are quite useful, for trading, in addition to FPS gaming, voice chat, and teleoperation. I'd pay extra for an extra low latency internet connection.
Faster internet woo-hooo!!!!
65ms trans-atlantic? They don't know the luxury they're enjoying. Try online gaming with this link:
----pip.shsu.edu PING Statistics----
26644 packets transmitted, 19888 packets received, 25% packet loss
round-trip (ms) min/avg/max = 240/1177/17729.
(actual ping record from '93, on a PVP server. And yeah, I had a positive kill ratio)
65 ms PER PACKET summed over all packets between the two countries over the course of several years could result in quite a few man-hours.
High Frequency Trading is theft.
It does not provide liquidity but steals from all of us.
It distorts price discovery to the extreme and can manipulate markets up and down to the extremes.
HFT is evil.
HFT should be banned.
See maxkeiser.com for more info.
In online games the "game clock" is synchronized between all participants, so those with faster link or who live closer to the server do not get unfair advantage. How hard would it be to introduce a similar policy on an exchange? introduce some time marks on which transactions can be booked (say, on the minute mark every minute), and introduce some artificial lag to those with 30ms link.
SEC goes out of its way to make sure that all trading is fair and equal opportunity, that no one acts on insider information, etc. Why not this? It will definitely increase liquidity in a world where physics limitation gives an unfair advantage to some participants.
...if they kept the NSAs snooping boxes out of the link.
If latency arbitrage is taxed, markets will become less efficient, and then a lot of risk hedging math will stop working, and we will run into huge economic debacles. We can always blame the Wall Street, but you won't know the good they do until they are gone. If you are looking for the product or service Wall Street offers it is fairly priced capital. You have used it, so has everyone. It is like sausages. Love it all you want, but please love the way capital is aggregated and preserved with an inflationary currency as the medium.
From here:
mises.org/books/bubbles.pdf
"The business cycle is initially generated by some sort of monetary intervention in the market, typically in the modern world by bank credit expansion to business. However, this monetary intervention could be in the
form of the following, listed by Gottfried Haberler:
(a) An increase of gold and legal tender money.
(b) An increase of banknotes.
(c) An increase of bank deposits and bank credits.
(d) An increase in the circulation of checks, bills, and other
means of payment which are regularly or occasionally
substituted for ordinary money.
(e) An increase of the velocity of circulation of one or all
these means of payments."
I don't exactly understand how the velocity of trading increases the money supply but we sure gonna find out with that cable.
Je me souviens.
This thread and series of modded-up comments proves that the majority of Slashdot users have no idea how financial markets work, nor how they enable society to progress to the level it has achieved today. Go back to your little cubicle to write code, go home to your wives, 2.5 kids and white picket fences, and stop making a fools out of yourselves. You made the choice to work for steady, meager wages, so stop complaining about people who make real contributions to the world and sign your 150k/year paycheques.
http://en.wikipedia.org/wiki/Maxwell%27s_demon
You're trying to extract energy from statistical noise, nothing more.
Also FatPhil on SoylentNews, id 863
if 6ms can make a difference, in making money in the markets, that clearly means the system is rigged.
If there is a queue of messages occupying the pipe, then we know that there is a queue lined up to transmit the message.
Suppose the message is actually occupies 0.5 ±.1 milliseconds of bandwidth, but the current users wait 100 ms for responses, it is not hard to use standard queuing theory to realize the message queue depth is in the large number of 10s of messages,
Shaving 6 milliseconds can (being an outsider looking at the situation), result in increasing the capacity 25 or more times. So, it is actually worth the cost.
Leslie Satenstein Montreal Quebec Canada
Here is a great talk about this subject: How algorithms shape our world. http://www.ted.com/talks/kevin_slavin_how_algorithms_shape_our_world.html
This article makes no sense.
If traders want lower latency to the market they'll simply put their trading boxes closer to the exchanges somewhere in New York, Chicago.. which is what traders do today. No one in their sane mind would have a trading system hosted in London trying to do trades with an exchange an ocean away when installing the systems close to the exchange is faster and easier.
The likely reason for the new cable is probably added capacity.
Just beat the speed of light, by pre-calculating many scenarios, such that you don't need to calculate anymore once the fresh parameters arrive.