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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! --
A reason for the Republicans to combat Global Climate change.
couldn't resist...
nothing to see here - move along
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."
My sympathies to all the high-frequency traders who have to wait an extra 10 mu to rip the rest of us off...
It must have been something you assimilated. . . .
/Nelson
I am Slashdot. Are you Slashdot as well?
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.
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)
Of course not. By it's nature it's an activity that produces nothing (it's not like a company's going to shut down if someone doesn't buy its stock for that particular tenth of a second), punishes investors (it raises the price for the person who wants to invest in the company but can't afford the millions in infrastructure cost to get a give few seconds advantage), increases the divide between the rich and the poor (see #2), and is a drain on human society.
From a geeky perspective it's a fun idea, though. It's just using technology for pseudo-evil that happens to make you rich.
This is terrible, because we all know that high-frequency trading is totally necessary for mankind to thrive.
If summer humidity is having an effect, what happens on a rainy day when humidity is 100%?
Also, does this mean someone could disrupt these transmissions with something like a drone...?
My 401(k) contributions are supposed to purchase new shares every Wednesday. I've noticed that sometimes it's Thursday, or Friday, sometimes they even miss a week and it's delayed into the next week. Wouldn't surprise me a bit to learn that the money is being held and used for other things in the meantime. Or that they sell me shares when the price is best for them.
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.
Only liquid water impedes microwaves. Vapor doesn't, nor does ice and snow. Even then, liquid water only marginally affects frequencies above 2 GHz. It's a big problem above 11 GHz in the Ku- and Ka-bands as satellite TV and satellite internet users are well aware.
Terrestrial point-to-point microwave is a little above 3 GHz, which has been demonstrated to be unaffected at all by liquid water, and completely unaffected by humidity. The problem is that this article doesn't even bother to mention the frequency used.
Humidity doesn't affect anything. The problem, from my humble perspective, would be processor throttling due to high heat at the receiving site. More so, the BER, or Bit Error Rate, is not even mentioned in the article even though it's the chief factor used to judge how a digital link functions.
Kriston