In an industry where a microsecond can mean the difference between winning or losing, some groups are willing to scale ever-increasing heights to provide high frequency trading (HFT) firms with an advantage over their competitors.
Take Vigilant Global, a Canadian telecommunications company owned by Chicago’s DRW Trading, one of the world’s largest HFT firms, as an example.
According to the Wall Street Journal, the company plans to build a tower in rural England 30 feet higher than London’s tallest skyscraper – London’s iconic Shard – in order to to beam microwaves across the English Channel for high-frequency-trading firms.
The 320 metre tower, proposed to be built in Richborough, Kent, “will provide a new communications point between the UK and Europe,” according a statement posted on the company’s website.
It’s height will allow for an unobstructed optical and radio line to continental Europe, avoiding the curvature of the earth’s surface and allowing the tower to trim valuable microseconds off the time it takes for a trade to hit an exchange.
Not only will a direct line of sight provide a speed advantage, but orders will also travel via microwave transmissions rather than more traditional means such as fibre optic cabling which can be slower.
According to the WSJ, microwave transmissions traveling through the air aren’t affected by the friction in traditional wiring that can slow data transmission to an exchange. Some estimates suggest that its around 30 to 40% slower to send a transmission via fibre optics than it is via microwave transmission.
In an industry where competitive advantage can be measured in microseconds, it’s akin to getting from point A to to point B in a private jet compared to a car. It’s a non-contest.
However, while the use of microwave technology might sound like science fiction, using poles to transmit signals may soon be dated technology as well.
Alphabet, through its “Loon” program, is already experimenting using high-altitude balloons that could potentially deliver the same technology currently only available on the ground.
You can read more here.
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