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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."
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
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!
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?
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.
"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.
Yup. In the US it sounds like about 1 out of every 3 dollars in profit made is made by the financial services sector. That is a sector that basically does nothing but move money from point A to point B - they're the middle-men of the economy.
Don't get me wrong, efficient allocation of capital is valuable. However, can it really be said to be efficient if it consumes a full third of the entire US economy?
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"!
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.
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.
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
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.
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.