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Aussie Telco Lays New Fiber For Microsecond Trading Boost
schliz writes "Australian data center and telecommunications provider Vocus has installed two new underwater fiber links across the Sydney Harbor in a bid for the lowest connection latency between the city's financial district and the Australian Securities Exchange's recently opened data center, north of the CBD. The project involved 1.6 kilometers of custom, 312-core single-mode optical fiber cable, and was expected to deliver a route that is 400 meters shorter than existing links. RTFA for pretty installation photos."
Not according to the politicians who were bought.
Is there anything positive about high-frequency trading (which I assume is the reason for this link)? It seems HFT it is really only benefitting large banks and introducing a whole lot of stability problems in stock markets. And what exactly is the economical purpose of investing your capital in a company for a few milliseconds?
CAPTCHA: breakage
The speed of the link isn't due to the shorter length but bypassing all the other parties along the line and dedicated bandwidth. Bypass the queue.
I have a friend who is a developer for a hedge fund where they pay him and a few others north of $250k each per year (it is NYC) to try and and shave milliseconds off transactions. They spend big bucks trying anything to reduce a transaction time from 4ms to 3ms or lower.
"The problem with socialism is eventually you run out of other people's money" - Thatcher.
From the article:
“It’s great to have [multiple paths], so if something did happen to the Harbour Tunnel, we’d be one of the carriers with capacity,” Spenceley told iTnews.
“It’s a one-in-a-million-year event but you just have to have it.”
But for nuclear power plants it's ok to only plan for 1 in 10'000 year tsunamis or so. But god forbid that trading link went down.
This is a privately owned cable.
Microsecond trading should be downright illegal. Instead of market fluctuations leading towards a stable price, market fluctuations are used to pump money out of the real economy into the virtual one. Nothing of value is added by such trade. Only real people are prevented from adding any value.
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
Where's this "virtual economy" money is being pumped into? Doesn't the profit from HFT go to the owners of the HFT company, who then invest or spend it? It's not just disappearing down a black hole, it's part of the same economy as the rest of us.
yes, they invest it.. into silly things like shortening the route 400 meters.
trickle down economics doesn't really count here, as no new wealth is created - but old wealth(resources) is used for this.
world was created 5 seconds before this post as it is.
. . . does that add more latency to the line? Can you measure actual versus expected latency to see if your undersea lines have been tapped?
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
It is time to make a global law. Every transaction should be subjected to a randomised delay between 1 and 2 seconds . Problem solved, smart people can start doing something useful again.
It's not just disappearing down a black hole, it's part of the same economy as the rest of us.
Actually, that's not true anymore. Take a look at how much consumer goods people buy all the time. Now think for a while how many people actually make all those consumer goods and where. The thing is, it takes just a few thousand people to manufacture enough units of the same goods for the whole world.
So yes, from our point of view, money is disappearing down a black hole. The black hole just contains a significant part of the world economy (in terms of money, not people). Some money leaks back from the black hole through employee wages but those money leaks are not as evenly distributed across the world as money suction. Do you still think that some areas can't be sucked dry?
The lack of enforcement of well established regulations on the banking industry created the financial meltdown we are recovering from. Regulation of the stockmarkets provides brakes yes, and prevents worse snake oil being peddled.
Fiber for stock trading is considered good by all the government departments that had to OK this. But according to (one half of) our government, fiber is a total waste for everyone else in the country, and we should never need more then the mobile (cell phone) networks can provide...
The dichotomy is impressive.
No. HFT used for arbitrage only stabilizes the prices. For speculation, it doesn't make much difference whether a trade is done in 1 ms or in 1 minute.
One guy on (IIRC) boing boing had a great suggestion about neutrinos. We can now transmit and recieve neutrinos and fire them directly through the Earth. If used to carry data, latency could be reduced by 3.14 (pi). A latency improvement of that magnitude would be important to some people, particularly between America and Europe.
But unfortunately, such a system could not send information back in time.
http://michaelsmith.id.au
Sigh. Like the new transatlantic cable for high speed trading, another project created solely to shave off time on automatic trades and thus print money. Does this do anything? Am I the only one who sees this as driving up transaction costs because you have "investors" who really don't invest in companies trying to take almost microscopic profit automatically? Where is the benefit to the financial system? What about the economy? I wonder how long people would stand for an extra layer being added to some other industry that does nothing but get paid for doing nothing?
These trades are like taxes, but they don't pay for any roads, health care, retirement, of national defense. They just make a few DBs who don't manufacture or invent anything rich. It will never happen, but I would like some politicians to get into an ethical debate on the socioeconomic benefits of this type of activity. Seriously. How defensible is this type of activity under Western Judeo-Christian ethical frameworks? Most American jurists publicly support natural law, at least while going through public confirmation hearings, so where exactly does this fit?
Make love, not reality television.
Definitely. Everyone who really cares about low latency is renting rack space colocated with the stock exchange at the site in Gore Hill. There is no point shaving 400m off the link to the CBD, as it will still be far poorer latency than running colocated. There's nothing in the CBD of significance that would make you want to run an application there vs in the colo.
The last time a foreign power tried to operate submarines in sydney harbour it didn't go very well.
http://michaelsmith.id.au
. . . does that add more latency to the line? Can you measure actual versus expected latency to see if your undersea lines have been tapped?
No - you can use something like a 1:99 optical splitter so they'll barely notice the signal drop, and will add about 5mm of optical fiber into the line, so they won't notice any additional latency (less than 20 picoseconds). Then run your 1% signal into an optical amplifier, say an EDFA, and snoop to your hearts content.
You can never know everything, and part of what you do know will always be wrong. Perhaps even the most important part.
"Trickle down" is fine in theory. In practice, the smart new money goes where the smart old money went: appreciating assets like old art, old land, old bricks and mortar.
That's mostly a closed loop where the same goods go round and round for higher and higher prices. People rarely "cash out" and spend the profits on new things that drive demand.
If you were blocking sigs, you wouldn't have to read this.
Why don't they co-locate the trading server in the same server room?
Or maybe in the same rack with the same switch?
Sent as ripples into the electromagnetic field. No single photon has been harmed in the process.
Any high frequency trader HFT, market marker, derivatives trader etc.... worth it's salt has already co-located with the ALC (ASX/SFE) data center in gore hill, if you are not interested in low latency trading with the ASX then why would you bother paying the extra $$$ for these lines when you can get a fiber line anywhere in sydney for $2K a month from pipe/TPG networks.
It said "windows 98 or better" so I installed Linux
Strewth! This new cable sounds Bonza! Betcha it'll get that financial data across the drink faster than you can say "A dingo ate my baby"!
This is really for connecting the two exchanges in Sydney, the ASX and Chi-X. Plenty of stocks trade on both exchanges so the advantages to knowing sooner what is happening on the other exchange are obvious.
If only it were true, but it ends up going into the bank accounts of the traders, who use it not to purchase goods and services but hoard it as a way of keeping score. A lot of the financial industry is only interested in competition on who can collect the most dollars.
Perhaps we should allow trades only by hand-written, wax sealed forms submitted by hand every Tuesday at 10am on the floor of the New York stock exchange. This could well reduce volatility - but would it really make for a fairer market? HFT isn't a bad thing. If anything, it benefits the market by increasing liquidity - more shares are changing hands, so it's easier for long term investors to buy and sell them.
All money is other people's money: my expenditure is your income and vice versa.
No it's not. Profits (if they result from actual new value, like in a car company, as opposed to taxes and de-facto taxes like the phone company) aren't other people's money. They're "new" money that didn't really come from anywhere. That money can support taxes without any impact to the economy.
Everything else, which is the large majority of money even in a capitalist economy, yes, that's other people's money.
Of course, it is not impossible to have profits in a communist economy. It's just less likely. Capitalism forces innovation, and forces efficiency increases. That sucks really badly, of course, for those who can't increase efficiency, but the alternative is a slow descent to the point where the state can no longer support keeping it's citizens alive, and either revolution or mass murder has to follow that point.
Microsecond greed is better.
With the need for ultra-low latency, I imagine they'll be running these links without encryption so you can read every transaction that way. You might even be able to squeeze your own frames in during idle periods and make false transactions. Oh, what fun an attacker could have!
How does it make it easier to buy and sell? The HFT won't buy shares unless there is already a buy order from someone else. So they create volume, but the supply/demand stay the same.
In the UK, several banks spent millions building hugely fast data centres to allow high speed trading. Then one enterprising firm rented some rooms in the same building as the London Stock Exchange and essentially dropped a cable down through the ceiling from their servers to the Exchange servers. Made quite a bit of difference...
I want a list of atrocities done in your name - Recoil
Besides adding value to the stock market. You mean letting people that actually *know* what something is worth price it correctly ? That's called insider trading, and will land you in jail !
First rule society places on a casino is that everybody is equally likely to loose money.
That's what's really happening here. All the people that actually work, including those that do useful things without getting paid, total, is ~ 2 billion, and dropping fast. And if you killed off the other 4 billion, keep in mind that a few hundred million of those 2 billion are essentially employed to babysit the 4 billion "useless" people.
Willing seller, willing buyer. End of discussion.
[FUCK BETA]
Which is exactly what you'd want. You see most money in existence (> 90%) is such "hoarded" money. You can pretend that money doesn't exist (and in fact you have to) if you are a government. So what did we do ? Ah simple, governments (through banks) printed 10x more money than is needed to run the economy.
The problem is, of course, given that banks and governments can (at best) back 10% of the money they claim to have ... is what happens if something happens that makes banks and or governments lose 10.00000000001% of their assets. Given the fact that governments "roll-over" loans, and increase their own debt burden to pay back interest "in the short term" (riiight), they are extremely sensitive to interest rate changes, and those rates are a function of human feelings ...
If you are a long term investor you don't mind that you have to wait a few weeks to collect the number of shares you want. HFT only benefits other HFTs and perhaps daytraders who are even worse.
It does cause temporary jobs and adds infrastructure. Too bad that infrastructure is pretty much reserved for more of this crap.
Eventually, to get a straight-line path, they'll either have to use neutrinos to communicate, find a way to lay a cable straight through the earth from one end to the other, or move everything into space.
Not really. Chi-X is at Global Switch in Pyrmont and there are already dedicated fibre links to the ASX colo at Gore Hill from there. This link appears to run to the CBD. Besides, there's very little volume on Chi-X so no-one trades there. It's a bit of a catch 22 - no volume there, so no-one trades there, so there's no volume. I reckon it's just used for re-reporting negotiated trades as it's cheaper than reporting on ASX. There definitely isn't enough going on there to make any money out of arbitrage or for executing hedges or anything like that.
It should be possible for anybody to open their own exchange and to set their own rules and then there would be competition in exchanges, some could then have their own rules, like no automated trading, etc.
Right. A thousand Bernie Maddofs would be better for investors than just having one.
First of all, I seriously doubt that you want to remove all regulations on trading; you probably draw some of your confidence in the market from those regulations.
That being said, high-frequency trading is damaging to the economy, by any reasonable, non-religious measure. Profit from HFT is based entirely on the speed of one's computer; it has nothing to do with the information available to investors, it has nothing to do with optimizing your trading strategy (mixed strategies take too long to compute anyway -- HFT is based on executing a suboptimal strategy too quickly for anyone with a theoretically better strategy to compete), and it is not a useful form of arbitrage. HFT turns futures markets into negative sum games for investors who are looking to hedge risks and even for speculators, siphoning money away from people who are using futures contracts in productive ways and filling the pockets of people who are doing nothing productive.
HFT firms are parasites, nothing more. The sooner we get rid of them, the better.
Palm trees and 8
Bernie Madoff was a privately ran ponzi scheme, something that nobody forces anybody else to join. It's much better than a publicly ran ponzi scheme, like SS or Medicare or the dollar or the bond. At least with a private ponzi scheme nobody forces you to stay in it, once you realise what it is.
However you are suggesting that:
1. The current system, that is heavily regulated is NOT a ponzi scheme and I disagree, the stock market is as much a ponzi scheme today, as the housing bubble was, and all of this is regulated and inflated by the Fed and government.
2. The private exchanges would be ponzi schemes. This is nonsense, ponzi schemes get discovered in the long run, and only businesses with a good model (those that provide customers with a good product/service) stay operational.
Again, nobody forces anybody into a private ponzi scheme unlike government ponzi schemes.
You can't handle the truth.
It doesn't need to be illegal, we have a big enough government already, we need to remove laws, not make new ones! What we need is a new exchange, that only executes trades once per week, and another that only executes once per month. If your company is on this exchange you are not allowed to be on any others. Bam problem solved. If you need your money out early there is a fee based on the past volatility of the stock. No more flash crashes, much less speculation, invest in a company due to dividends as it should be and not fucking stock appreciation!
Maybe this is more to mitigate the connectivity issues around the Vocus data centre. In the past few months I've had more outages from their data centre than the other one we host with. Whether this has to do with the retailer we've been using or the data centre itself is probably up for debate, but more links can't be a bad thing.
Speed of light in air is greater than in an optical fibre (glass) by a significant margin. Refractive index of dry air ~1, for glass ~1.5. Why can't they use a directed radio link, and use the fibre only as backup. Is it slower to modulate radio signals?
400m is 1.3 ns (nano-seconds), 2.6 ns for round trip. If that kind of time interval is make or break, then I wonder why they're still talking about microsecond trading!
The reaction of the attacker should also be very fast, considering the actual orders are already done on a micro-second scale.So an attacker should react in a fraction of that time. Going to be tough.
In December 2010 Frank Zhang of the Yale School of Management published a paper claiming that HFT accounted for 70% of the dollar trading volume in the U.S. capital market.
David Woodcock, the Regional Director of the SEC, confirmed this number in a lecture I attended at the University of Texas at Dallas in May.
As far as HFT reform goes, I think that ship has sailed. Or, quoting from the film "Giant": "You should have shot that fella a long time ago. Now he's too rich to kill."
Please recalculate. A nice thing to remember is that 1 ns corresponds to ~30 cm at the speed of light.
"It's too bad that stupidity isn't painful." - Anton LaVey
That's not why it's a waste of cash. It's a waste of cash because it's not going to be doing anything productive. It's simply going to allow some robot to make a trade six tenths of a millisecond faster. Whoopdy-doo. It's not going to help anyone, it's not going to make progress for anything, it's not going to do anything useful other than help make some already rich guys a fraction richer.
400m is 1.3 ns (nano-seconds),
Microseconds, not nano-seconds, and light is only ~0.65c in fiber. If you multiply your round-trip value by 1000, then double it, it will be closer to the actual value.
And people shaving slivers off gold coins still invested and spent that which they shaved off. Doesn't make it right.
Which is exactly what you'd want.
No, it's not. We'd like to see that money spread out a lot more evenly, used to increase the quality of life for everyone, not just a few dumbasses at the top shaving off everyone else's trades.
Yeah, you still haven't addressed his point. Yes, stuff like that gets discovered. It still ends up fucking everyone else over. I don't give a shit about "you're not forced into it", that still doesn't justify allowing it.
Markets are feedback control systems
I'm an electronics engineer and have had postgraduate courses on this. Any delay introduced in the feedback loop will tend to destabilize the system. HFT works fine, it provides liquidity to the market, it benefits everyone.
BTW, I also derive most of my income today from trading stocks, not in a bank, but my own savings, trading from home. I'm perfectly satisfied with the way the system works.
People who hate the market suffer from the same problem as those who hate people from a different race. It's prejudice caused by ignorance.
To assume that traders are greedy people who only want to steal from you is the same as some Alabaman who believes blacks are lazy and stupid men who only want to rape white girls with their huge penises.
The free market is a very positive force that benefits everyone. Look at North Korea for what will happen when there's no free market. Look at other third world countries to see what happens when markets are small and primitive.
HFT is necessary because prices are not continuous amounts, they are broken at $0.01 intervals. To see how bad this is, imagine a share with a price in the single-digits cent range. This company really exists. If you could buy it at $0.01 you would have the perfect deal, it cannot go any lower and if it goes up you win at least 100%. According to my broker page, which I cannot link here, right now there are bids to buy 7882 million TecToy shares at $0.01.
One cent is an extreme case, but this problem appears at any price. Prices are not an analog value, they are subject to effects coming from the gaps between the cents. HFT is a way to filter some of these problems through dithering. This is the same principle that lets printers print gray scales with black ink, they print many very small black dots and varying the interval between the dots lets it show any value of gray.
I'm a fiscal conservative so normally I'm on the free market side of things like this. But I agree with OP. The problem here is you have a buyer and a seller, and a middleman. The buyer announces he wants to buy something. Before his announcement reaches the seller, a middleman gets his announcement, gets to the seller first, buys him out, then sells to the buyer. There really is nothing of value being added except a few microseconds.
If the buyer never would've found the seller, then yes there's value being added by the middleman. But that's not the case here - the buyer would've found the seller after a second or two. The only reason he doesn't find the seller is because the middleman interfered by buying him out, and so you end up with the middleman justifying his existence by "solving" a problem he himself created. It's circular reasoning.
I don't think the solution is making it illegal though. There's too much overhead figuring which trades were affected this way. As others have suggested, just insert a random delay of a few seconds into trades. Or you could make it so a trader has to hold onto shares he bought for 15 minutes before he's allowed to resell them.
A fraction? It's a process of queing, if you are faster than every one of your competitors then you are first in line. That means you might be buying a stock for $20/share vs $25/share and when buying on the magnitude of millions of shares it can make a huge difference.
Think about it this way
1 - $20, fastest: 10million shares of company X, starting value $20, market cap: 1billion shares. Cost raised 1%
2 - $20.20, 1.1ns slower: 50million shares of company X, cost raised 5%
The second purchaser cost just went up 10million dollars, when you are making trades hundreds of millions of times a day the difference can be billions of dollars easily. Then again, it's making rich guys richer, but a fraction richer, I'd say no. It's a huge deal worth paying for the best programmers, engineers, etc.
WTF Slashdot, why do I have to login 50 times to post?
The big benefit from this isn't so much the extra speed when everything's working, it's getting a geographical diversity path across the harbor that's a lot shorter than whatever backup path they're using today. Also, the benefit isn't so much to trading speed (because Australia's too small a market and too far away from civilization (:-) for microsecond differences in trading speed to matter), but to what kind of technology you can use over the cables. The extra half-millisecond might make a lot of difference to a Storage Area Network or give them more ability to distribute computers around the harbor, and it might also make a difference that the backup path is a lot shorter.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
You don't get the advantage here. You always have "a few assholes" that think they deserve the world and have the physical power to make that happen. Do you really think that Obama is any better than Kim Yong Il (junior these days I hear) ?
One big difference between Amerika and North Korea is not that the assholes at the top own 90% plus of the nation's production. That's true in both cases. One difference is that America has 10x more money than it should (at least, probably more). In other words the cumulative value of the dollar represents over 10x the value of America. Except in America 10% of that money buys you a comfortable lifestyle, because really you're buying 90%+ of the actual value with it. The 90% of money collecting interest and "working" in stocks and buildings does not DO anything, so it doesn't represent any value at all.
The big problem with this approach is ... that regularly investments become worthless due to bubble effects attracting big investors and turning out to be ponzi schemes, and big investors ... loose big. Wait ... "big investors" ... who is that again ? The 10% or the 90% ?
In the end the whole financial system is built to play the rich out against one another, making sure the end result of any face-off is random, which results in no-one really amassing power like they did just before the American independance happened. The founding fathers were smart enough to make sure that the way they rose to power (which was with big -for the time- bank accounts) would be extremely difficult to use against the government they created.
A million dollars is pocket change for a telco or a trading firm. It's going to be good for customers in the long run because it's competition in the market for getting data across the harbour. But all the talk about reducing latency from the "financial district" to the ASX site is marketing bullshit.
Everything I've been reading strongly suggests that such "microsecond transaction time" trading be negated, that mandatory (and large) delays be placed in all such transactions, that they even be limited to x number per day!
And the Aussies go and encourage this crap? Shame on you, Oz .. you're usually more level-headed than that. Well, it's your market. Go ahead and screw it up, see if I care.
"Free market" is not "fair market" - the natural end game without government intervention is swinging monopolies and rapacious cartels.
"If it moves, tax it. If it keeps moving(HFT), regulate it. And if it stops moving, subsidize it." --Reagan
Casteism