$300M To Save 6 Milliseconds

whoever57 writes "A new transatlantic cable (the first in 10 years) is going to be laid at the cost of $300M. The reason? To shave 6ms off the time to transmit packets from London to New York. The Hibernian Express will reduce the current transmission time — roughly 65 milliseconds — by less than ten percent. However, investors believe the financial community will be lining up to pay premium rates to use the new cable. The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund."

Cheaper than a huge flying vacuum

[rolfwind]

To suck American's and other peoples' money out of their wallets from overhead. Same basic effect.

Re:Great

[Anonymous Coward]

now they can lose everyone else's money even faster!

FTFY

Proof that the system is corrupt

[dargaud]

This kind of thing is the direct proof that the way the stock exchange is built is deeply flawed. Why don't they try to build it on sounder bases than "the fastest takes all" ?!?

New performance metric.

[geekmux]

"...The article suggests that a one-millisecond advantage could be worth $100M per year to a large hedge fund."

I think we now have real proof that life is moving too fast when the metric to measure your performance as a large hedge fund investor is now measured in single milliseconds.

I'm glad I'm not a large hedge fund investor. Think your 30-minute lunch break is shitty? These guys don't have time to blink.

Re:Blame the market

[Rosco P. Coltrane]

Fractional reserve banking actually creates money. It doesn't create an artificial scarcity.

Yep, it creates money and debases it in the process. So you're correct, it doesn't create artificial scarcity, but it creates real poverty in the long term for those who have a little money.

Re:Blame the market

[sjames]

It only creates money if it is distributed to all. Currently it creates artificial abundance for a tiny percentage at the top and creates a scarcity for the rest of us.

The giant leach on society

[Puff_Of_Hot_Air]

The entire finance sector fills me with equal parts revulsion and sadness. This is yet another example of enormous resources consumed for no net gain to society. At least in this case something (however unnecessary), tangible is produced as a result. Think of the huge numbers of brilliant mathematical and programming minds that have been consumed by this nonsense! Think of the resources and financial liquidity that is reinvested into this zero sum game! Every hour of work, every employee, every structure erected in praise of this wholly disgusting idol of modern nihilism, makes the rest of our society just that little bit worse. To those who would praise the enabling power of our new financial systems I say Pah! We can create better financial systems within virtual worlds. The only intrinsic value in the financial institutions is the power it gives; and this has been abused for all it is worth! Give me back my engineers! Give me back my scientists! Give me back my hope for a better future!

Re:Cheaper than a huge flying vacuum

[igny]

Re "What it really comes done to is the investors willing to invest into an infrastructure."

What it really comes down to is investing in a tool to facilitate the robo-gambling, aka Wall Street. The claimed profit of $100m/ year would come from retirement funds of John Does from the Main Street.

Re:Proof that the system is corrupt

[delt0r]

When will people understand that liquidity is a GOOD thing?

When it is measured in microseconds and milliseconds? Seriously! And then you bring up trading stocks 100 years ago? WTF! 1 second to make a trade IS liquid.

Re:Proof that the system is corrupt

[Arlet]

But the notion that "the fastest takes all" is wrong. The fastest just takes a tiny profit for providing a service. The service is providing equal prices for the same trade on both sides of the Atlantic, which lowers the risk for everybody else involves in global trade.

If the fast trader wants too much profit, somebody else will also buy some of that low latency bandwidth and start competing. Since the investment to become a fast trader is pretty small, the profit margin will be driven down to very low levels. In the end, the profit settles at a reasonable price for the service provided.

A short history of unfair trading practices...

[thesandbender]

1817 : Major Brokerage leases building on Wall ST!
1836 : Major Brokerage house installs first telegraph!!
1890 : Major Brokerage house installs first telephone!!!
1990 : Major Brokerage house has access to internet!!!!

Sound investing is based on research but it is also based on the ability to react quickly to that information. If a company in the US announces that their CFO has been indicted, then investment firms in the UK are definitely going to pay to get that information and react to it as quickly as possible. Before you could submit bids to the fed electronically, investment firms used to place runners in pay phone booths next to the Fed so they could call them at the last minute and have them get in the best bid. Fundamentally, there is no difference between that and this.
And yes, "black box" high-frequency traders are going to be the primary users of this line but that doesn't mean there aren't valid and legitimate (as far as the average consumer is concerned) uses for this line.

Already Noted in Slashdot

[InterGuru]

by yours truly, here [slashdot.org].

I just read an article in Popular Science that almost made me sick to the stomach. The headline says it all "Pricey Transatlantic Cable Could Save Milliseconds, Millions by Speeding Data to Stock Traders".

Here is $400M being spent just to give flash traders a 5 ms advantage in trans-atlantic trading. It adds nothing to the economy, just lets the Wall Street Casino operators skim more money from the economy. I addition, it diverts talent from productive projects.

Never has Matt Taibbi's description of Goldman Sachs, and by extension, all the big banks, as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" seem even more apt.

Re:Cheaper than a huge flying vacuum

[Jawnn]

Congratulations on completely missing GP's (admittedly off-topic) point. Making money off of the buying and selling of money is a drain on the economy. It produces nothing of intrinsic value and, by design, enriches only a lucky few. If you read your history, you will find that the rise of such an "economy" is frequently the harbinger of society's fall from dominance, if not it's outright collapse. And that is most certainly not "a good thing".

Re:Cheaper than a huge flying vacuum

[VanGarrett]

Your understanding of the stock market is poor. Most of the money floating getting passed back and forth is from insurance companies, banks and various types of investment funds. Because each of these contributors is continually dumping more money into the market (when the economy is behaving normally, anyway), the odds of making a profit are generally in your favor-- which is where the stock market differs from gambling. Wall Street really isn't like a Vegas casino. Sure, someone loses big every once in a while, but on the whole, the system has done more help than harm, and has made a lot of those retirement funds of John Does from Main Street possible.

Re:How?

[Turken]

Because all high frequency trading does is inflate the cost for those of us who do invest in the "old-fashioned" buy-and-hold manner.

I heard it best described in this way: There's a hot new gadget that's being released today, and you *really* want to go buy one. Unfortunately, as you're walking down the street, some hedge fund investors see you coming and quickly jump in front of the store milliseconds before you get there to form a line at the door. The store opens, the investor at the front of the line buys ALL of the gadget inventory. He then turns around and sells all those units to the guy behind him for a small profit, who sells to the guy behind him for a small profit, who sells to the guy behind him, etc.

Eventually, they get back to you, but now if you're going to buy that gadget, it's going to cost you some significant percentage more to purchase for actual use. And you don't really have any option if you're going to buy one, because every store selling the gadget has a pool of financial sharks circling the entrance just waiting for another "traditional investment" sucker.

In the end, the store doesn't benefit, since they still only sold the item at the normal price, and you don't benefit because you just got your price jacked up. The only beneficiaries are the HFT scum who have played the system in such a way to artificially inflate your costs to their own benefit while adding absolutely no actual value to the product as it passed through their hands. This DOES impact you, because the more of your investment that gets siphoned out by the hedge funds, the less you have left to actually invest in the original stock.

Re:The giant leach on society

[Puff_Of_Hot_Air]

See this is exactly the ignorance I am trying to fight! That you imagine modern innovation is a product of financial institutions boggles the mind! This is a chicken and egg situation, and you are claiming that egg has feathers! Modern financial institutions are a product of need brought about by massive industrial development. I am not denying the need, I am decrying the abuse. To put it in over-simplified terms, the financial institutions are the middle men in all the commerce that occurs, all the development, all the property. They take a percentage for their services, and there is nothing particularly upsetting about this. Where it becomes a problem is when more money is being removed from the overall system through abuses in the methods. HFT fits this bill, and I see no reason not to decry it. Invest in that which will ennoble; science, arts, engineering, and stop playing these foolish games.

Re:Cheaper than a huge flying vacuum

[Kral_Blbec]

You realize that the hedge fund that hedge fund managers manage is comprised of John Does retirement fund, and that the manager only profits when he makes a profit for the John Does, right?