Why do HFT traders buy old towers

^{Some of the existing routes of microwave (6-11 GHz) wireless communication networks between Chicago and New Jersey (NYSE), from the presentation of the McKay Brothers / Quincy Data Trading Show Show 2014}

From 2010 to 2012, stock market researchers noticed a strange decrease in ping between Chicago and New York by 3 milliseconds . At first they attributed this to the introduction of new fiber-optic cables with improved characteristics, but then they paid attention to the new technology of microwave networks in the 6-11 GHz range, which were actively licensed in 2011 and 2012.

Having studied the problem, the authors of the work proved that it is possible to transmit information along the line of sight in the microwave spectrum faster than through fiber!

It is no secret that for high-frequency (HFT) trading every millisecond is important, especially in the field of arbitration between the neighboring exchanges of Chicago and New Jersey (there is the NYSE). Having learned about the price change in Chicago, the HFT-bot in New Jersey can quickly execute orders at the real price that the bots of competitors will find out after an eternity only after a millisecond.
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To improve by a few milliseconds ping between the exchanges of London and New York, for example, financial corporations are ready to spend hundreds of millions of dollars on laying new transatlantic cables not far from existing ones, but with a more optimal route. When it comes to terrestrial communication channels, it turned out that it is more efficient to transmit data over the air between stations that are in direct line of sight.

According to scientists, investors will invest in this infrastructure more than $ 500 million over the next five years. It is about buying up towers and building your own where there are none. The process has already begun.


^{Routes of "microwave" (6-11 GHz) wireless networks in the UK, from the presentation of the McKay Brothers / Quincy Data Trading Show Show 2014}

The French high-frequency trading specialist and author of the 6/5 book, Alexandre Laumonier, was very interested in this issue. He discovered that his house is very close (4 km) from a straight line between the two largest European exchanges in London and Frankfurt. He collected information about all the towers with microwave antennas in the region and made a map on which routes information is transmitted.



Moreover, he made a KMZ file for Google Earth, which can be downloaded and closely examined in detail near each tower.



Sometimes they stand in the open field next to each other.





Or used high buildings in the cities.



The construction of such networks is engaged in several companies. The first group is the high-frequency traders themselves, these are Jump Trading (aka World Class Wireless from Chicago), the Dutch firms Optiver , Flow Traders (aka Global Connect), and DRW (aka Vigilant Global).

The second group is the McKay Brothers , Custom Connect , NeXXCom and Latent Networks providers.

Interestingly, many Belgian microwave radio towers were built by the US Department of Defense in the 1970s.



^{From a 1979 Department of Commerce document in a tower in the Belgian city of Woorn (Houtem)}

In the 2000s, they were for some reason sold to the Belgian government, and she let them go under the hammer. For example, the auction for the Verne Tower in 2012 lasted several hours. The authorities, who were unaware of the real demand for the goods, expected to receive about € 400,000 and set a starting price of € 255,000. Everyone was completely stunned when the mast went away for € 5,000,000. announced a break and went to the toilet, where he gasped in perplexity: "What the hell ...". Then he returned and continued the clearly protracted bidding.


Worne Tower (Belgium)




Base diameter of about 25 cm


The tower holds 48 steel cables