25.1.2012: A new deep-sea fibre-optic cable is planned between London and NY stock exchange

The way money is made today, depends of the speed of transactions on any stock exchange. Since computers (running specialized SW) are used these days, due to the latency of the signals being exchanged between two nodes, a local dealer posses a (small) advantage against a remote dealer. This is in particular true for any intercontinental business.

The computer signals being transferred between the London and the NYSE are send over the standard transatlantic fibre-optic cables for any internet traffic. Unlike any satellite link, the cable follows the surface of the earth -- thus safes distance -- but suffers a little from the fact, that the e.m. group velocity in the f/o cable is reduced to 2/3v.

Assuming a distance of roughly 6000 km, we end up in a delay of at least 6000km/300.0000km/s => 30 msec. The total delay is actually larger, since we need to consider the latency of the f/o repeaters as well. In case of TCP/IP, we also need to take into account the protocol delay: The information has to to transferred from A -> B; B has to do some computation; reacts and send some order to A: B -> A. Finally, A has to acknowledge: A -> B. A useful approach would be to place an agent at A doing some pre-computation and setting up some state. Now B can trigger this agent (requesting some state) with one (UDP) packet only to act locally [2].

Anyway, the communication between the electronic markets can be considered as critical infrastructure [3] -- however not for the regular people and markets but for the money making machinery, as pointed out in this sketch Lesch's Kosmos [4] broadcasted on Germany's ZDF today.


[1] http://publicintelligence.net/new-300-million-transatlantic-cable-makes-stock-trades-6-milliseconds-faster/
[2] http://pointsandfigures.com/2010/11/12/trading-at-the-speed-of-light/
[3] http://belfercenter.ksg.harvard.edu/files/PAE_final_draft_-_043010.pdf
[4] http://www.zdf.de/ZDFmediathek/beitrag/video/1503614/Sind-wir-eigentlich-wahnsinnig%253F-#/beitrag/video/1503614/Sind-wir-eigentlich-wahnsinnig%3F-