Balloons, drones and low earth-orbiting satellites – these could be the next weapons in the battle to squeeze every last microsecond out of a trade execution. Hugh Cumberland, a solution manager at connectivity provider Colt, said: “It may sound like science fiction. But if the prize is high enough, someone may make it work.”
For years, high-frequency traders employing statistically driven speed-sensitive strategies have been pushing for ever-faster trading connectivity. Microwave lines are the latest innovation in the space. Information travels through air some 35% to 50% faster than through a fibre-optic line and some of the world’s most important trading routes – including Basildon to Frankfurt and New York to Chicago – are now well-served by microwave networks.
But the key trading route between New York and London has yet to be conquered by microwave firms. This is because microwaves must be beamed in a straight line between a relay of fixed dishes, making large bodies of water a significant obstacle. Some connectivity providers, however, are researching a number of creative solutions.