Aussie Telco Lays New Fiber For Microsecond Trading Boost 212
schliz writes "Australian data center and telecommunications provider Vocus has installed two new underwater fiber links across the Sydney Harbor in a bid for the lowest connection latency between the city's financial district and the Australian Securities Exchange's recently opened data center, north of the CBD. The project involved 1.6 kilometers of custom, 312-core single-mode optical fiber cable, and was expected to deliver a route that is 400 meters shorter than existing links. RTFA for pretty installation photos."
High-Frequency Trading (Score:5, Insightful)
Is there anything positive about high-frequency trading (which I assume is the reason for this link)? It seems HFT it is really only benefitting large banks and introducing a whole lot of stability problems in stock markets. And what exactly is the economical purpose of investing your capital in a company for a few milliseconds?
CAPTCHA: breakage
Re:High-Frequency Trading (Score:5, Insightful)
On the grand scale ? No. It completely perverts the whole idea of "investing" and encourages nothing but speculation.
Re:High-Frequency Trading (Score:5, Insightful)
Speculation? No, not at all. Speculation is at least on the seconds scale, not microseconds. Unless you mean "speculating that your algorithm doesn't contain any bugs". In that case, yes, it's pure speculation.
Re:High-Frequency Trading (Score:5, Funny)
Eventually it's going to get to the point where they can't get any faster. Then they will have to resort to some variant of the Konami code [wikipedia.org] to keep one-upping each other. You know, push the price Up, push the price Up, Short, Short, move your investment to the ticker symbol to the Left on the board, then the Right, Left again, then Right again, Bundle a bunch of securities together then Auction the pieces off. Oh wait, they already did that. Damn those guys are fast!
Re:High-Frequency Trading (Score:5, Informative)
Not really. Stock-exchanges should either just enforce once-a-minute matching (with lottery determining which trades to fulfill if there's several takers), or they should just set some minimal fee for every non-filled order which stands for less than a minute, 1% of the order-value would be plenty, probably even 0.1% of the order-value would be enough to stop HFT dead.
They're taking steps, some of them, but it's baby-steps. For example the Norwegian stock-exchange is adding a $0.01 fee for every trade - for those traders who file more than 70 orders for every *one* that goes trough, only orders which are withdrawn before 1 second has passed, are counted.
This is an *extremely* timid step. Make it $1, one in ten, and 1 minute rather than 1 second, and we're talking.
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For every cent these HFT-basters make, a cent is lost to the normal investor, money fund or long time invested hopefull.
They claim they are making values but the values come from someone else. What they are is abusing a system that was never ment to do this in the first place.
Delays destabilize the system (Score:4, Insightful)
Markets are feedback control systems [wikipedia.org]
I'm an electronics engineer and have had postgraduate courses on this. Any delay introduced in the feedback loop will tend to destabilize the system. HFT works fine, it provides liquidity to the market, it benefits everyone.
BTW, I also derive most of my income today from trading stocks, not in a bank, but my own savings, trading from home. I'm perfectly satisfied with the way the system works.
People who hate the market suffer from the same problem as those who hate people from a different race. It's prejudice caused by ignorance.
To assume that traders are greedy people who only want to steal from you is the same as some Alabaman who believes blacks are lazy and stupid men who only want to rape white girls with their huge penises.
The free market is a very positive force that benefits everyone. Look at North Korea for what will happen when there's no free market. Look at other third world countries to see what happens when markets are small and primitive.
HFT is necessary because prices are not continuous amounts, they are broken at $0.01 intervals. To see how bad this is, imagine a share with a price in the single-digits cent range [yahoo.com]. This company really exists [tectoy.com.br]. If you could buy it at $0.01 you would have the perfect deal, it cannot go any lower and if it goes up you win at least 100%. According to my broker page, which I cannot link here, right now there are bids to buy 7882 million TecToy shares at $0.01.
One cent is an extreme case, but this problem appears at any price. Prices are not an analog value, they are subject to effects coming from the gaps between the cents. HFT is a way to filter some of these problems through dithering [wikipedia.org]. This is the same principle that lets printers print gray scales with black ink, they print many very small black dots and varying the interval between the dots lets it show any value of gray.
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This would be credible if the HFT guys bought everything and waited for a buyer to come along, then sold at a modest profit. This would add liquidity.
But they are not, they only buy when they know there is a real buyer in the market already, so they can get in and out quickly with their profit. As the buyer is already in the market they are not adding any liquidity that is not already there, they are just skimming.
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Re:High-Frequency Trading (Score:5, Insightful)
High Frequency Trading is the equivalent of 'shaving', the practice of shaving a small amount from gold coins, then passing the coins on. It produces nothing, it only steals from the flow of wealth.
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The news still has to be processed by a human, right? Can those people read a news item and feed info to their algorithms in less than a second?
The more advanced algorithm do this already. Statistical analysis of text works quite well on spam mail, it'll work even better when millions of dollars are involved.
The whole idea of those high speed traders is to respond before the rest of the world. If the rest of the world starts reacting sooner as well, you need to go even faster.
Iterate a few times and you end up with the current situation where computers make all the decissions and economics have nothing to do with it; just mathematics.
It'd be quite
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It would be funny to send out news bulletins like "Bernanke refrained from not announcing an end to quantitative easing" and then watching all the HFT algos trade in different directions, then :-)
Re:High-Frequency Trading (Score:4, Insightful)
Maybe stock market transactions should require a CAPTCHA. No human intervention, no purchase/sale. (There could be exceptions for stuff like limit orders, which have a long history and aren't that open to abuse - in this case the CAPTCHA would be at the time of placing the order, not the time it's executed.)
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However, the main argument in support of HFT is not "synchronization", but rather an increase in liquidity. Pro-HFT people claim that HFT fulfills a market-making function where it matches up a buyer and a seller very rapidly, while pocketing a small fraction of the bid-ask spread. They don't tell you that they use e.g. quote stuffing to artificially increase this spread, thus earning more money. Have a look at this graph [nanex.net] fr
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!Length (Score:2, Insightful)
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299,792,458m/s/1,000,000usec=299.792458m
400/299.792458m=1.3342563807926081983023068578997
Light in fiber is closer to
1.33*2=2.67us to travel 400m
Queuing time would be in addition to the shortening.
Not surprising (Score:5, Informative)
I have a friend who is a developer for a hedge fund where they pay him and a few others north of $250k each per year (it is NYC) to try and and shave milliseconds off transactions. They spend big bucks trying anything to reduce a transaction time from 4ms to 3ms or lower.
Re:Not surprising (Score:5, Informative)
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So what are the hackers waiting for?
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So you can get physical access to the start point... no optical skills needed.
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Ah, more evidence that the financial industry has been overtaken by the gamblers and card sharps. Only instead of counting cards at the blackjack table, they are gambling that milliseconds of latency will give them an edge over the rubes.
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Only $250k for that work? Ridiculous. These people can make the company billions of safe reliable dollars. They aren't out there with the kind of risks that come from other forms of investment. Good technologists should be seeing the kind of money that traders make. Not what amounts to minimum wage in the most expensive city on the planet.
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While NYC is somewhat expensive it's by no means the most expensive on the planet:
http://www.smh.com.au/business/the-worlds-50-most-expensive-cities-20120612-207lr.html?rand=1339479813872 [smh.com.au]
33rd this year down from 32nd last year (according to the annual Mercer study).
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The thing with technology is that if there's nothing to apply it to, then it doesn't make any money. They'll pay him for whatever the work is worth to them.
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Re:Not surprising (Score:5, Insightful)
I think the current recession proves that it is misguided to think it is all down to one sector of the economy.
The current recession was effectively created by the financial sector, otherwise it'd be over already. What they did was they leveraged some crappy loans into a global crisis and then they insured themselves by betting against those loans. The biggest heist in history was the fact that bailing out the insurance companies was basically the same as bailing out the institution who'd caused everything.
Atm. you cannot trust the financial sector, that's why we're still in this mess.
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Or are we sweeping the rampant profligacy of governments over the past 20 years under the carpets because it doesn't gel well with this hang-a-banker sentiment?
If you want to blame everything on a bunch of guys who were acting inside the rules and regulations they were told to abide by, that's fine. But the real damage was done by incompetent legislators and regulators who failed to pay attention and adequately oversee the indu
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Just because something is legal doesn't make it moral. Of course, noone is questioning the responsibility of the governments, but this story is not about them.
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If you want to blame everything on a bunch of guys who were acting inside the rules and regulations they were told to abide by, that's fine. But the real damage was done by incompetent legislators and regulators who failed to pay attention and adequately oversee the industry they were charged with.
So bankers need to be told by the government that they should not take advantage of people? Do we really need the government dictating morals and ethics?
And that's not even touching the mass market of morons
So how many bankers are willing to donate a couple hundred million dollars to improve the education system, so that people understand that an adjustable-rate mortgage is not something that will work in their favor? You know, since it is the fault of the uneducated masses for having been taken advantage of by the innocent bankers who were just doing th
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So how many bankers are willing to donate a couple hundred million dollars to improve the education system, so that people understand that an adjustable-rate mortgage is not something that will work in their favor?
Huh? An ARM is not advantageous? Since when? I'm pretty sure I read about a study claiming that there has never been a good time to lock in, and that went all the way back to the Great Depression. But even on the face of it, there will never be a time in the future when my mortgage will be as high as it is today. And ARMs always have a lower rate than anything you can lock in at today. So, if I can start paying down a bit more principal a bit faster today, then by the time that the rate increases, I'll
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So to sum up, why do people take advantage if they can? Because there is an advantage to be gained.
And as for that sarcastic diatribe about 'innocent' bankers... dude, I didn't say they were innocent. In fact, I explicitly stated that they were not blam
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Just because you don't trust them doesn't mean that they are entirely to blame.
No, their actions show that they are entirely to blame.
If you want to blame everything on a bunch of guys who were acting inside the rules and regulations they were told to abide by, that's fine.
1). Just because something is legal doesn't make it right.
2). When these are the people that lobbied hard for those things to be made legal AFTER they were shown to be extremely dangerous (think repeal of Glass Stegal), then you can't hide behind the, "It's legal!" argument anymore.
but the argument that they are entirely to blame for the world's current economic woes is not only specious, but a blatant scapegoat that the uninformed masses have been happy to bleat about for long enough now.
Bullshit. Most of the problem is that the banks are so big, that they were able to affect people who didn't engage in the activities you mentioned above.
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Re:Not surprising (Score:4, Informative)
"The problem with the world is eventually you run into people like Thatcher". - MRe_nl
All money is other people's money: my expenditure is your income and vice versa.
Thatcher was a whip used on the lower and middle-classes in the UK. Her continued praising leaves me baffled.
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She was very good with one-liners. Powerful weapons in politics.
I still remember her by one line: "Thatcher, Thatcher, School Milk Snatcher!"
Profit isn't all bad (Score:2)
All money is other people's money: my expenditure is your income and vice versa.
No it's not. Profits (if they result from actual new value, like in a car company, as opposed to taxes and de-facto taxes like the phone company) aren't other people's money. They're "new" money that didn't really come from anywhere. That money can support taxes without any impact to the economy.
Everything else, which is the large majority of money even in a capitalist economy, yes, that's other people's money.
Of course, it is not impossible to have profits in a communist economy. It's just less likely. Cap
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Need forces innovation. If someone needs something that doesn't exist, gue
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I think the current recession proves that it is the capitalism at the stock exchange that has caused other people's money to run out.
And I think that quote proves that people no longer know what capitalism means, and see it as a synonym for "making money".
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Driving up the price right before someone wants to buy a stock is basically highly sophisticated price gouging.
Interesting Risk Assessment (Score:5, Insightful)
From the article:
“It’s great to have [multiple paths], so if something did happen to the Harbour Tunnel, we’d be one of the carriers with capacity,” Spenceley told iTnews.
“It’s a one-in-a-million-year event but you just have to have it.”
But for nuclear power plants it's ok to only plan for 1 in 10'000 year tsunamis or so. But god forbid that trading link went down.
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I don't think it's as reliable as they think.
Remember Christmas 2006? Heavy earthquake in Taiwan. Hong Kong got cut off from most of their Internet connections (other than local) for days, and it took weeks to be back to normal.
There are several undersea cables between Taiwan and Hong Kong, over different routes. Now I don't know the size of Sidney Harbour but I have the feeling that the Taiwan Strait is a bit bigger. So those routes are further apart. Not a "single point of failure"? Think again: they were
More money from the real into the virtual economy (Score:5, Insightful)
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new exchange is all that is needed (Score:2)
It doesn't need to be illegal, we have a big enough government already, we need to remove laws, not make new ones! What we need is a new exchange, that only executes trades once per week, and another that only executes once per month. If your company is on this exchange you are not allowed to be on any others. Bam problem solved. If you need your money out early there is a fee based on the past volatility of the stock. No more flash crashes, much less speculation, invest in a company due to dividends a
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Where's this "virtual economy" money is being pumped into? Doesn't the profit from HFT go to the owners of the HFT company, who then invest or spend it? It's not just disappearing down a black hole, it's part of the same economy as the rest of us.
yes, they invest it.. into silly things like shortening the route 400 meters.
trickle down economics doesn't really count here, as no new wealth is created - but old wealth(resources) is used for this.
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Besides adding value to the stock market. You mean letting people that actually *know* what something is worth price it correctly ? That's called insider trading, and will land you in jail !
First rule society places on a casino is that everybody is equally likely to loose money.
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Re:More money from the real into the virtual econo (Score:4, Insightful)
It's not just disappearing down a black hole, it's part of the same economy as the rest of us.
Actually, that's not true anymore. Take a look at how much consumer goods people buy all the time. Now think for a while how many people actually make all those consumer goods and where. The thing is, it takes just a few thousand people to manufacture enough units of the same goods for the whole world.
So yes, from our point of view, money is disappearing down a black hole. The black hole just contains a significant part of the world economy (in terms of money, not people). Some money leaks back from the black hole through employee wages but those money leaks are not as evenly distributed across the world as money suction. Do you still think that some areas can't be sucked dry?
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That's what's really happening here. All the people that actually work, including those that do useful things without getting paid, total, is ~ 2 billion, and dropping fast. And if you killed off the other 4 billion, keep in mind that a few hundred million of those 2 billion are essentially employed to babysit the 4 billion "useless" people.
Re:More money from the real into the virtual econo (Score:4, Insightful)
"Trickle down" is fine in theory. In practice, the smart new money goes where the smart old money went: appreciating assets like old art, old land, old bricks and mortar.
That's mostly a closed loop where the same goods go round and round for higher and higher prices. People rarely "cash out" and spend the profits on new things that drive demand.
Re:More money from the real into the virtual econo (Score:5, Insightful)
If only it were true, but it ends up going into the bank accounts of the traders, who use it not to purchase goods and services but hoard it as a way of keeping score. A lot of the financial industry is only interested in competition on who can collect the most dollars.
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Which is exactly what you'd want. You see most money in existence (> 90%) is such "hoarded" money. You can pretend that money doesn't exist (and in fact you have to) if you are a government. So what did we do ? Ah simple, governments (through banks) printed 10x more money than is needed to run the economy.
The problem is, of course, given that banks and governments can (at best) back 10% of the money they claim to have ... is what happens if something happens that makes banks and or governments lose 10.00
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How does it make it easier to buy and sell? The HFT won't buy shares unless there is already a buy order from someone else. So they create volume, but the supply/demand stay the same.
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If you are a long term investor you don't mind that you have to wait a few weeks to collect the number of shares you want. HFT only benefits other HFTs and perhaps daytraders who are even worse.
The religion of the "free market" (Score:5, Insightful)
That being said, high-frequency trading is damaging to the economy, by any reasonable, non-religious measure. Profit from HFT is based entirely on the speed of one's computer; it has nothing to do with the information available to investors, it has nothing to do with optimizing your trading strategy (mixed strategies take too long to compute anyway -- HFT is based on executing a suboptimal strategy too quickly for anyone with a theoretically better strategy to compete), and it is not a useful form of arbitrage. HFT turns futures markets into negative sum games for investors who are looking to hedge risks and even for speculators, siphoning money away from people who are using futures contracts in productive ways and filling the pockets of people who are doing nothing productive.
HFT firms are parasites, nothing more. The sooner we get rid of them, the better.
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you probably draw some of your confidence in the market from those regulations.
- no I do not. I draw only one type of confidence from all these regulations, the confidence that I will be conned by the system, that is set up to prevent real competition and it promotes the type of criminality that government wants - fake money, fake prices, monopolies, etc.
As to whether HFT is damaging to the economy - that is irrelevant in a system that is not set up to create and maintain monopolies, as long as all transactions are voluntary.
By the way, you are also wrong in that the HFT is damaging
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By the way, you are also wrong in that the HFT is damaging the economy in concept, the money is changing hands
Not all trades are beneficial to the economy. If I produce something and sell it, that is useful for the economy. HFT firms are not producing anything or providing useful services, they are leaching money from people who are.
In reality the stock market trading is actually a zero sum game
No, the stock market is a positive sum game, because companies turn profits and those profits are reflected in the dividends they pay or in the equity of the stock. One investor seeing a profit does not imply another investor seeing a loss.
Futures markets are zero sum games in
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Bernie Madoff was a privately ran ponzi scheme, something that nobody forces anybody else to join. It's much better than a publicly ran ponzi scheme, like SS or Medicare or the dollar or the bond. At least with a private ponzi scheme nobody forces you to stay in it, once you realise what it is.
However you are suggesting that:
1. The current system, that is heavily regulated is NOT a ponzi scheme and I disagree, the stock market is as much a ponzi scheme today, as the housing bubble was, and all of this is
If the NSA submarine cuts the line to tap it . . . (Score:2)
. . . does that add more latency to the line? Can you measure actual versus expected latency to see if your undersea lines have been tapped?
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The last time a foreign power tried to operate submarines in sydney harbour it didn't go very well [wikipedia.org].
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. . . does that add more latency to the line? Can you measure actual versus expected latency to see if your undersea lines have been tapped?
No - you can use something like a 1:99 optical splitter so they'll barely notice the signal drop, and will add about 5mm of optical fiber into the line, so they won't notice any additional latency (less than 20 picoseconds). Then run your 1% signal into an optical amplifier, say an EDFA [wikipedia.org], and snoop to your hearts content.
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The reaction of the attacker should also be very fast, considering the actual orders are already done on a micro-second scale.So an attacker should react in a fraction of that time. Going to be tough.
Random delay legislation (Score:3, Interesting)
It is time to make a global law. Every transaction should be subjected to a randomised delay between 1 and 2 seconds . Problem solved, smart people can start doing something useful again.
Re:Random delay legislation (Score:5, Funny)
Every transaction should be subjected to a randomised delay between 1 and 2 seconds . Problem solved, smart people can start doing something useful again.
Yeah like modelling the random number generator.
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A global law? You mean from the world government?
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Even better, give every share a timestamp of 2 weeks during which time it can't be sold. This would allow for fast trade but only in limited quantities.
Fiber for trading, good (Score:3)
Fiber for stock trading is considered good by all the government departments that had to OK this. But according to (one half of) our government, fiber is a total waste for everyone else in the country, and we should never need more then the mobile (cell phone) networks can provide...
The dichotomy is impressive.
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Yes, because the Liberal plan was all about relying on mobile infrastructure, and not rolling out entirely new, hi-speed wireless data...
Neutrinos (Score:3)
One guy on (IIRC) boing boing had a great suggestion about neutrinos. We can now transmit and recieve neutrinos and fire them directly through the Earth. If used to carry data, latency could be reduced by 3.14 (pi). A latency improvement of that magnitude would be important to some people, particularly between America and Europe.
But unfortunately, such a system could not send information back in time.
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You'd only reduce latency by a factor of pi/2 because signals going around only have to traverse *half* the circumference of the earth to arrive at the other end. (yes, they do it again to get back, but that applies to the direct route too!)
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Yeah you are right, I was thinking of pi*D
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Theoretically, you could also do HFT between two exchanges if you are halway between them. For that, neutrinos might provide a small boost, although an 1.57x speedup most likely wouldn't be worth the costs involved.
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The top HFT firms are actually buying server racks inside of the stock exchange building, with the racks closest to the transaction servers being the most expensive.
It's amazing how many people in this thread have made up their own version of facts and baldly stated them as true.
In reality, the exchanges are careful to make sure all cable runs are the same length (within the building). Once in a while, they will offer a new, faster "tier" of service such as 10GB links which of course is quickly adopted by many firms.
(Now, of course, you have to wonder whether or not I just made that up.)
A waste of brains (Score:3)
Sigh. Like the new transatlantic cable for high speed trading, another project created solely to shave off time on automatic trades and thus print money. Does this do anything? Am I the only one who sees this as driving up transaction costs because you have "investors" who really don't invest in companies trying to take almost microscopic profit automatically? Where is the benefit to the financial system? What about the economy? I wonder how long people would stand for an extra layer being added to some other industry that does nothing but get paid for doing nothing?
These trades are like taxes, but they don't pay for any roads, health care, retirement, of national defense. They just make a few DBs who don't manufacture or invent anything rich. It will never happen, but I would like some politicians to get into an ethical debate on the socioeconomic benefits of this type of activity. Seriously. How defensible is this type of activity under Western Judeo-Christian ethical frameworks? Most American jurists publicly support natural law, at least while going through public confirmation hearings, so where exactly does this fit?
Re:A waste of brains (Score:5, Insightful)
Yup. In the US it sounds like about 1 out of every 3 dollars in profit made is made by the financial services sector. That is a sector that basically does nothing but move money from point A to point B - they're the middle-men of the economy.
Don't get me wrong, efficient allocation of capital is valuable. However, can it really be said to be efficient if it consumes a full third of the entire US economy?
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US economy has this problem and many others, all created by the Federal reserve and Treasury, and thus by Congress and Senate and the White House starting from Theodore Roosevelt.
But of-course at the end of the road there is the mob, and it's the mob that decides to vote the politicians in who promise shit that is impossible to deliver without ruining the economy, given the fact that the people who end up promising this stuff are crooks, who themselves want to get into power to steal it and the money that i
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I can see problems for human speculators, but not for investors.
An investor buys a stock now, to hold for a significant period of time (months or years), collecting dividend and hopefully sees the value of that stock increase. And the stock value is ultimately determined by the profit of the company that issued the stock.
Does this micro-second trading lower the value of the stocks? It doesn't seem so because overall, over the long run, the bourses tend to go up. And so do stocks of all healthy companies. Co
Why fiber? (Score:2)
Why don't they co-locate the trading server in the same server room?
Or maybe in the same rack with the same switch?
really? do they know their market at all? (Score:3)
Any high frequency trader HFT, market marker, derivatives trader etc.... worth it's salt has already co-located with the ALC (ASX/SFE) data center in gore hill, if you are not interested in low latency trading with the ASX then why would you bother paying the extra $$$ for these lines when you can get a fiber line anywhere in sydney for $2K a month from pipe/TPG networks.
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As a fiber guy I would suspect that the latency angle is overblown and this is more for diversity or because existing fiber routes are fully utilized.
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Aussies proud of new fiber (Score:3, Funny)
Gordon Gecko (Score:2)
Move in upstairs (Score:3)
Radio (Score:3)
US HFT dollar amount (Score:2)
In December 2010 Frank Zhang of the Yale School of Management published a paper claiming that HFT accounted for 70% of the dollar trading volume in the U.S. capital market.
David Woodcock, the Regional Director of the SEC, confirmed this number in a lecture I attended at the University of Texas at Dallas in May.
As far as HFT reform goes, I think that ship has sailed. Or, quoting from the film "Giant": "You should have shot that fella a long time ago. Now he's too rich to kill."
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Not according to the politicians who were bought.
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This is a privately owned cable.
Re:looks like a.. (Score:5, Insightful)
Definitely. Everyone who really cares about low latency is renting rack space colocated with the stock exchange at the site in Gore Hill. There is no point shaving 400m off the link to the CBD, as it will still be far poorer latency than running colocated. There's nothing in the CBD of significance that would make you want to run an application there vs in the colo.
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Re:looks like a.. (Score:4, Interesting)
Not really. Chi-X is at Global Switch in Pyrmont and there are already dedicated fibre links to the ASX colo at Gore Hill from there. This link appears to run to the CBD. Besides, there's very little volume on Chi-X so no-one trades there. It's a bit of a catch 22 - no volume there, so no-one trades there, so there's no volume. I reckon it's just used for re-reporting negotiated trades as it's cheaper than reporting on ASX. There definitely isn't enough going on there to make any money out of arbitrage or for executing hedges or anything like that.
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400m is 1.3 ns (nano-seconds), 2.6 ns for round trip. If that kind of time interval is make or break, then I wonder why they're still talking about microsecond trading!
Re:looks like a.. (Score:4, Insightful)
That's not why it's a waste of cash. It's a waste of cash because it's not going to be doing anything productive. It's simply going to allow some robot to make a trade six tenths of a millisecond faster. Whoopdy-doo. It's not going to help anyone, it's not going to make progress for anything, it's not going to do anything useful other than help make some already rich guys a fraction richer.