Slashdot Mirror
Heat and Humidity Slow Down High-Frequency Trading Due To Microwave Links (hackaday.com)
szczys writes: Even tiny slowdowns have major ramifications on automated stock trading. To put the computing power as close to the markets as possible, microwave links (point-to-point links via dedicated microwave dishes) connect Wall Street to server installations in New Jersey. Hot weather, especially when accompanied by high humidity, slows those links down enough to make an impact on trading. From a report via Hackaday: "For short-haul links around the financial centers in New York, though, dedicated network links are favored for low-latency connections. Rather than trusting their trades to the vagaries of the internet and risk an unfavorable routing path or a cable severed by an errant backhoe, high-frequency trading firms often rely on microwave links to exchange information. [...] As it turns out, those microwave connections are the weak link in the system. During the early July heatwave, the links were experiencing slight delays in transmission times over that 16-mile path and throwing off the timing of the trading algorithms. The delay was minuscule -- on the order of 10 microseconds -- but in a business where millions are made and lost in seconds, that's substantial." Last month, Bloomberg reported that high humidity was impeding radio transmissions among three New Jersey data centers where U.S. stocks trade. According to a note Nasdaq sent customers, it took about 8 microseconds longer to send info from the stock exchange's facility in Carteret to the New York Stock Exchange data center in Mahwah, and an extra 2 microseconds to send data to Cboe Global Markets' exchange in Secaucus.
I doubt it.
Maybe if fewer quants tried to hedge things to change a method for investing capital into a method for legalized gambling, the world would be a better place.
(caveat - some of my cousins work for such firms)
-- Tigger warning: This post may contain tiggers! --
I hope some person / voice of conscience at the SEC or Treasury is advocating to put a per-transaction fee on stock trades in the long run someday. Even 1/10000 of a cent. That probably would be enough.
I find it hard to understand how microsecond quantitative trading that screws all of society by skimming ~ a penny off of every 100 shares, is providing any extra liquidity that benefits the market (which is their claim to why this is a valid thing to do). We're all being played by these quantitative traders, for the pure benefit of billionaires.
It's interesting that one motivation for using microwave communications is to avoid the risk of disruptions like inadvertent cable cuts. However, cables buried in the ground are probably more resilient to attacks than 16-mile communications over open air. If humidity spikes can impact communications, how about steam chimneys, kites, and balloons along the path placed by competitors, not to mention intermittent random jamming.