January 31, 2012

Who’s Winning The Race To HFT Zero Latency?

NeXXCom Wireless is deploying ultra low latency microwave radio technology it says effectively cuts more than 3 milliseconds (mS) from the fastest fiber networks on the major financial trading path between the financial centers of Chicago and New Jersey.

"Today we are below 10mS round trip, which is a significant improvement for high-frequency trading (HFT). With further product improvements, we expect to approach within 1mS of the speed of light," predicts Sal S. Benti, chairman & founder.

He continues, "There is no way to accurately measure the effect of the speed increase but it has been estimated that each 1mS improvement can be worth $100 million to a financial trading firm. Our client firms are highly secretive about their trading network strategies and given the amount of profits involved, it's understandable." 
 
Adds Hunter Newby, CEO of Allied Fiber and founder of the Dark Fiber Community, "Fiber and microwave complement each other in many areas, including HFT and mobile backhaul for LTE and other technologies. For HFT, fiber offers the highest levels of aggregate bit capacity, whereas for ultra-low latency, microwave offers speed advantages with sufficient bandwidth to be most effective for certain HFT applications.”
 
In a speech in Beijing last year Andrew Haldane, senior policy maker at the Bank of England commented on the extraordinary speeds that financial instrument trades are conducted. "New trade technologies have progressively raised the speed limit for trading. Today, this is measured in microseconds — millionths of a second. Tomorrow, it may be measured in nanoseconds — billionths of a second. There is effectively a 'race to zero' among trading technologists, as market advantage lies in being the fastest," he said. 

NeXXCom Wireless has been working with HFT firms, already deploying a low-latency microwave network between Chicago and New Jersey; it now is designing additional networks for trading firms located in the United States and Europe.

More about NeXXCom Wireless: The company’s carrier-grade, point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet increasing bandwidth requirements. In addition to wireless backhaul, it also provides solutions for leased-line replacement, last-mile fiber extensions, and enterprise networks for commercial and government entities.