Speed of Light Constrains High-Speed Traders

connectivity

A new study from MIT is getting attention for its central thesis: that the speed of light is becoming a bottleneck for high-speed financial traders seeking to execute trades in microseconds on a global scale. The paper is discussed this morning at PC World (link via InsideHPC). "Recent advances in high-frequency financial trading have made light propagation delays between geographically separated exchanges relevant," write authors Alexander Wissner-Gross and Cameron Freer.

The paper has significant ramifications for data center infrastructure. The MIT researchers have done detailed calculations about where trading networks can locate data center infrastructure to capture additional microseconds. They first mapped out the locations of major global exchanges, and then charted the optimal placement of servers to create "chains" that could accelerate the transmission of pricing data and execution of trades.

"Note that while some nodes are in regions with dense fiber-optic networks, many others are in the ocean or other sparsely connected regions, perhaps ultimately motivating the deployment of low-latency trading infrastructure at such remote but well-positioned locations," the MIT paper notes.

Trading Infrastructure Branches Out