Why do HFT traders buy old towers

    Some of the existing routes of “microwave” (6-11 GHz) wireless networks between Chicago and New Jersey (NYSE), from the presentation of McKay Brothers / Quincy Data Trading Show 2014

    From 2010 to 2012, exchange activity researchers noticed a strange decrease in ping between Chicago and New York at 3 milliseconds . At first they attributed this to the introduction of new fiber optic cables with improved characteristics, but then drew attention to the new technology of microwave networks in the range of 6-11 GHz, which were actively licensed in 2011 and 2012.

    Having studied the problem, the authors of the work proved that along the line of sight in the microwave spectrum it is possible to transmit information faster than through optical fiber!

    It's no secret that every millisecond is important for high-frequency (HFT) trading, especially in the area of ​​arbitration between the neighboring exchanges of Chicago and New Jersey (where the NYSE is located). Having learned about the price change in Chicago, the HFT bot in New Jersey can quickly execute bids at the real price, which competitor bots will find out after eternity only in a millisecond.

    To improve ping between the exchanges of London and New York by several milliseconds, for example, financial corporations are ready to spend hundreds of millions of dollars on laying new transatlantic cables not far from the existing ones, but with a more optimal route. When it comes to terrestrial communication channels, it turned out that it is more efficient to transmit data by air between stations that are in direct line of sight.

    According to scientists, investors will invest in this infrastructure more than $ 500 million over the next five years. We are talking about buying up towers and building their own where there are none. The process has already begun.

    Routes of “microwave” (6-11 GHz) wireless networks in the UK, from the presentation of McKay Brothers / Quincy Data Trading Show 2014

    French high-frequency trading specialist and author of 6/5 book Alexandre Laumonier was very interested in this issue. He found that his house is very close (4 km) from a direct line between the two largest European exchanges in London and Frankfurt. He collected informationabout all the towers with microwave antennas in the region and made a map on which routes the information is transmitted. Moreover, he made a KMZ file for Google Earth, which can be downloaded and explored in detail near each tower. Sometimes they stand in a clean field next to each other. Or used tall buildings in cities. The construction of such networks is handled by several companies. The first group is the high-frequency traders themselves, these are Jump Trading (aka World Class Wireless from Chicago), the Dutch companies Optiver , Flow Traders (aka Global Connect), as well as DRW (aka Vigilant Global). The second group - providers

    McKay Brothers , Custom Connect , NeXXCom, and Latent Networks.

    Interestingly, many Belgian microwave radio towers were built by the US Department of Defense back in the 70s.

    From a 1979 U.S. Department of Commerce document on a tower in the Belgian city of Houtem.

    In the 2000s, they were for some reason sold to the Belgian government, and she went under the hammer. For example, an auction for the Vörne towerin 2012, it lasted several hours. The authorities, who had no idea about the real demand for the goods, expected to receive about € 400,000 and set a starting price of € 255,000. Everyone was completely stunned when the mast went for € 5,000,000. They say that in the middle of unexpectedly prolonged bidding, the leader was nervous. announced a break and went to the toilet, where he exhaled bewilderedly: "What the hell ...". Then he returned and continued the obviously protracted bidding. Tower in Wörn (Belgium) Base with a diameter of about 25 cm . 48 steel cables hold the tower

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