High Frequency Trading Neighborhood - Part III

Note Perev .: In this part, the author will step back a little from his story about the fabulously expensive Belgian tower of the American HFT company Jump (read about it here ). But, as in the first part of the story, it will give a small insight into the history of the use of towers for the transmission of microwave radiation. In addition, the author will devote this part of his story to the review of HFT companies operating in Western Europe and will pay particular attention to the so-called “pirates traders”.

How the abandoned US military facilities, British pirate radio stations of the 1960s and modern trading companies are connected, as well as which main players are fighting for influence (and the use of radio towers) in Western Europe, read below.
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[ first part ] [ second part ]

An invaluable source of information on radio-relay communication lines for me was the book of one of the greatest historians known to me, Adrian Jones , entitled “The Death of a Pirate Radio Station. British radio and the way of making money in the information age. ” This compulsory book pays considerable attention to renowned pirate radio stations of the UK of the 1960s, which were located on ships, and also tells about the stations equipped on the stunning forts of the US Army Shivering Sands , which were part of the Maunsell Military Forts used during air defense. world war.

Thanks to such vertical structures, satellite dishes were both more stable and positioned higher than on ships. Populating abandoned forts, broadcasters including Screaming Lord Satch [ Eng. Screaming Lord Sutch ] and his Radio City, could use the height to attract more listeners, and, consequently, get more profit through advertising. It was all about height.



Here is the exact location of the Shivering Sands and Red Sands forts:



Notice that the Shivering Sands forts are exactly on a straight line between the NYSE building in Basildon and the Deutsche Börse in Frankfurt. It’s possible that Optiver and McKay Brothers are also very close to Red Sands (which I personally doubt). Curiously, did the HFT market players think about using these old forts? It would be great to replace the old antennas of pirated radio stations with huge Andrew antennas , which are so fond of Jump Trading. The Pirate Bay torrent tracker has already tried to create a server on another fort in the far north, in the famous Principality of Sealand , and re-equip it into an “ information paradise ”.

However, the most interesting issue in the “Death of a Pirate Radio Station” is the story of the emergence of the first pirate stations. They were not popular broadcasters making money on high seas signaling, but rather people who tuned in BBC receivers [ Eng. British Broadcasting Corporation - British Broadcasting Corporation ] so as to listen to other programs, such as Radio Normandy. Radio signals are the wonders of nature; in my opinion, they are the common good. When the first pirate radio stations appeared, the authorities quickly imposed a monopoly on these miracles, and then had to classify them. International Telecommunication Union [ eng. International Telecommunications Union, ITU ], originally founded in 1865 as the International Telegraph Union, was responsible for the classification of radio signals. Today, HFT traders have to pay the state for allowing the use of microwave signals [of a certain range]. If a company wants to cross the channel from France to England, it will have to ask the state to select a radio frequency band. Due to the fact that most of the radio frequencies in some areas have already been ordered or occupied, crossing the channel is not an easy task: one of the competing organizations, for example, had difficulties crossing the English Channel. HFT trading is hard work, and pirates are not asleep here.

Custom connect

According to Bloomberg , “The Custom Connect Network was the first network of microwave lines connecting the main financial centers of Europe, for the use of which several trading companies could pay […] About 25 companies use the Custom Connect network, including such trading units as investment banks and organizations, involved in HFT trading, ”said Jan Willem Meher, co-owner of Custom Connect. - “The basis of the network, the cost of creation of which is estimated at 5 million euros (6.8 million dollars), is 13 towers across Europe.” Jump paid for one tower as much as the whole network costs.

I started learning Custom Connect in early July. I was sitting on the Custom Connect website, at some point a message box popped up, and someone asked if I needed help. It was Jan Willem Meicher. When I told him that I wanted to know where the Custom Connect towers are located, he replied: “I cannot say. Confidentially".

What a pity. However, the Custom Connect website has an article from De Volkstrand (see the English version here ) containing a map.

The map, though not entirely accurate, is interesting. Belgium is the least open country regarding the provision of data, but using different files , I was able to find several towers with Custom Connect plates installed. I found the locations of others thanks to Cartoradio , the official map of the French National Frequency Controller [ fr. French Agence National des Fréquences, AFRT ], one of the French government authorities along with ARCEP [ fr. Autorité de Régulation des Communications Électroniques et des Postes - Office for the Regulation of Electronic Communications and Mail ]. If you click on the tower on the right, the names “Custom Connect”, “Global Connect”, “Latent Networks”, etc. will appear, as well as all the details about the antennas. It is worth paying special attention to the azimuths , since they determine the direction of the signal. This helped me compile my first maps of communication lines in Google Earth:



When comparing a map from an article in Volkstrand with my map, a question arose with a tower in Genape (circled in a white rectangle in the picture above). Custom Connect should have two antennas on this tower, but it is located north of the routes I drew. I have no information on how this tower is connected to any other, so I bet that Custom Connect creates a new network and uses the tower in Genape to replace the tower in southern Belgium. Naturally, this assumption is justified, which means there are chances. Now let's see how the Custom Connect network crosses the channel:



Custom Connect has “plates” on a tower with stretch marks 107.2 meters high in Monlambert near Boulogne-sur-mer (where, probably, Vigilant also have their antennas), and according to Cartoradio , the two plates have an azimuth value of 327.2 degrees This means the Custom Connect signal is transmitted to another tower with stretch marks south of Dover. Custom Connect also has antennas in Rotham and Dunkirk, England, but when I looked through my work before writing this post, something excited me a lot.

When I started to draw a map with images of Custom Connect lines in July, I didn’t know what valuable information could be found on the Ofcom website. Ofcom is the UK regulatory authority that distributes radio signals between customers, such as television and radio broadcasters, mobile operators ... and high-frequency traders. The Ofcom map allowed me to identify the places where operators asked for a range of frequencies, which in turn helped me to find towers in England that these operators could use. One of the competitors told me to look at the Ofcom map for licenses to cross the channel. Click here and find a list of operators with English licenses using the frequency range from 2 to 26 GHz (this is used by high-frequency traders) in the north of France and Belgium:



You will find Vigilant Global (aka Smartable LLC), McKay Brothers (aka Decyben), Jump Trading (aka World Class Wireless), Flow Traders (aka Global Connect), Optiver and Latent Networks, but not Custom Connect, and this is strange. I decided to compare different data from different state regulatory agencies. I downloaded all available generic ANFR data . The files list all the towers and all satellite antennas used (or not used) by each of the operators. I gathered some more information and realized that all (without exception) Custom Connect antennas in France in the lists are marked with the tag “ Antenna is authorized but not activated ”. Very strange.

I began to dig further. I realized that the application for the installation of Custom Connect antennas in Rotham was issued quite recently, since the company received permission in July 2014. But they say that the network has been operating since March 2013; If Rotham is in the middle of the Dover-Slough route, does this mean that Custom Connect did not have a Dover-Slough link before July or August 2014? This would mean that Custom Connect only conducted a network between Frankfurt and Basildon. In addition, the permission to install Custom Connect antennas in Dunkirk was granted in January 2014 - which is quite problematic, given that Dunkirk is located in the middle of the Dover-Basildon route, and this network was supposed to work from March 2013. In addition, there is no license for the name “Custom Connect” in Dunkirk on the Ofcom website. How did they send the signal to Basildon? The most interesting is the application for the installation of a tower in Dover:



© Dover District Council

First, the permission was submitted for consideration on July 25, 2014 and is still not confirmed - judging by the files, Custom Connect wants to dismantle the antenna aimed at Boulogne, add an antenna with a direction to Rotham and save the antenna towards Dunkirk. Secondly, also judging by the files, the azimuth value of the “plates” will be 109 degrees, so they will not be directed towards Boulogne, but much further north. Last but not least, according to Ofcom, Custom Connect has two licenses at Dover: 0996747 and 0956492. License No. 0996747 is needed to send a signal from Dover to Rotham, and license No. 0996747 can be used at ... Basildon. It all sounds weird. I doubt whether it is possible to pave the route from Dover directly to Basildon; if possible, why does all competitors need at least one more tower between dover and basildon? In addition, if Custom Connect has a license for the Dover-Basildon route, what about the application for installing a tower in Dunkirk? It does not make sense (I will not go further into the technical details, but who knows, he will understand: it is impossible to obtain a license in Dunkirk based on the frequency assignment application that Custom Connect has at Dover and Basildon, because the tower in Dunkirk is equivalent to the tower in Basildone and Dover). The situation is as follows:



I spoke to people from the microwave industry. I was told that it is possible to cross the channel without a license, but it would be very difficult and not entirely legal. There were also rumors that one of the HFT competitors had installed “plates” on a tower in Dunkirk without permission (some argue that this could be a Custom Connect). But rumors are rumors, and I prefer the facts. With that said, this would not be the first time that an HFT trader installs antennas unnoticed. Jump once illegally installed antennas on a well-known tower in Swingate and modestly apologized :

“Two huge satellite antennas offered by World Class Wireless were actually installed before submitting an installation request . Both WCW and Arqiva [the company owning the tower] would like to offer a sincere apology for this mistake and say that they did not mean anything wrong with the municipality. ” Lol

Both Dunkirk and Suingate were part of the famous Chain Home system, built in 1937 (I'll talk more about it in Part V); they provided tremendous support to the Royal Air Force during World War II and are now part of British history. Installing antennas without permission for such historical monuments is a " serious crime ." These monuments are the pride of the UK, guys, treat them with respect!

I don’t know how about illegal antennas in Dunkirk, but I know for sure that Custom Connect has no broadcasting licenses there. As for the intersection of the channel, I found all the licenses required by various competitors, except for the Custom Connect license: perhaps they are very well hidden, use other names, etc. I went back to the Custom Connect website in the hope that a message box would open, but nobody was there. But I found out one curious detail. The slogan of the company seems to be the words once uttered by Steve Jobs. Check out LinkedIn's profile by Olav van Doorn (another founder of Custom Connect). The company's description begins with the following two sentences: “It is better to be a pirate than to serve in the navy (Steve Jobs). A phrase that is best suited to describe Custom Connect . ”

What? Custom Connect Do Pirate Business? It can not be ... I thought that radio pirates no longer exist! During my three-month study, I heard that someone tried to illegally obtain a range of frequencies, but such stories may be fiction. I can not believe: one of the fastest new networks in the world illegally mined radio frequencies. It can not be. But that would be amazing: the old Maunsell military forts built in 1937 were used by pirate radio stations in the 1960s; so I would not be surprised if I find pirates in Dunkirk or Swingate, since that tower was built in the same 1937 for the same military purposes. There are a lot of secrets around Custom Connect - for sure, there are no exact information about the company - but the fact that the Jump Trading once illegally installed antennas on a tower in Swingate is indisputable. So the pirates are not asleep.

Optiver

I did not know who I would find, while I indicated my first routes on the map. I was almost sure that I would run into McKay Brothers (I knew they were creating a network), but at first I ran into companies that I hadn’t heard about before. One of them is Communication Infrastructure Ldt . Apparently, this is the provider of network services a la Custom Connect, a company not engaged in prop-trading. I found them everywhere, from Cornwall to France. In one of the anonymous letters I received during the research (yes, I received anonymous letters!) It was said: “ Communications Infrastructure is a fictitious company without customers with the same licenses to trade with assholes like ... ” stop. Wait a minute For now I will not write the name “idiot”, since this company will be the main star of Part IV. However, to clarify: Communications Infrastructure requested a lot of licenses in England, but I did not find any application for installation (UPD: although at least one of their applications was accepted here ). I doubt that they have installed antennas (in France, some of them are “not activated”). So the company is still dummy?

I also learned about NexxCom , who built a network of radio-relay lines of communication between New Jersey and Chicago. I discovered them in Cornwall, at the very end of the communication line route. There are two types of competitors in Europe: for some, it is only important to create a communication line between London and Frankfurt (Custom Connect, McKay Brothers); the rest decided to stretch their nets to Chicago (Vigilant, Optiver, Jump Trading, Flow Traders, Comm. Infra and NexxCom), so they need to move south Cornwall where they should get to the cable laying station Atlantic Crossing 1 (AC1); from there, the data is sent to the US via fiber optic cable. But after two years, Cornwall will cease to be an important point, so I don’t quite understand why NexxCom applied for permission at Four Lanes last February (I heard that some HFT company would support NexxCom, but I don’t know its name).



One of the major competitors is much more serious than Communication Infrastructure or NexxCom - the Dutch company Optiver , which is engaged in prop-trading. Optiver has several great routes and a good reputation in the industry. Rumor has it that they can be the fastest; to be fast is great, but the most difficult task is to remain the fastest, and this is not so easy. Optiver has two licenses for crossing the channel, and they are located on the same tower with Custom Connect and McKay Brothers in Dunkirk. I visited the tower in Annua in Belgium and photographed something from there:



Optiver has some interesting routes going through Cornwall (they have offices in Chicago):

Flow traders

You will not find the name “Flow Traders” (another Dutch prop-trading company ) in any legal document, only the name “Global Connect”. I have never heard of Global Connect before, but their email address, Jacob Bontiusplaats 9, 1018 LL Amsterdam, is the same as the Flow Traders location. I can't tell you anything special about Flow. Someone says that they were the first European company to establish a network of radio-relay lines of communication between London and Frankfurt (and they have licenses to cross the channel). Flow Traders, like Optiver, has routes to Cornwall. There is another Dutch trading company from Amsterdam, IMC , but I did not find confirmation of whether IMC has radio relay lines, even though on this LinkedIn page , created on January 31, 2014, we find out that the companies a special Project Manager or Lead Manager is required to improve the results of creating routes for the fastest network used to transfer stock market data between the most important financial points around the planet . ” A new competitor may soon appear on the map.

Vigilant global

And here is Vigilant Global , a prop trading company from Montreal. Vigilant is now a subsidiary of DRW . One person from this area confessed: “ Vigilant is the best among my competitors ”. Another said: “ Actually, I’m amazed at Vigilant / DRW. They were the first. I think they are masters of their craft . " Yes, Vigilant were the first to create a network in Europe. Maybe they started the network in 2011, maybe even in 2010. During the mapping, I understood why people in the industry admire Vigilant: they are really good.

Anne Broklhurst wrote about the difficulties that Vigilant faced in trying to set up the “plates” in Benfleet , but I don’t think this was a big problem. Why are Vigilant good? First, they do not ask for a lot of licenses before installing their antennas (Jump asking for a lot of radio frequencies, but often they don’t use everything, even when they have to pay UK regulators). It seems to me that Vigilant engineers checked all possible situations very carefully before requesting licenses. Secondly, they have a number of excellent routes. It is very curious whether these routes from Boulogne to Cornwall are the work of Vigilant:



These routes are long and tangled (microwave lines do not like moisture and fog). But their best move is perhaps this route:



To understand why, you need to remember that a new fiber-optic cable is being laid between England and the United States: the famous Hibernia cable (the cable laying plan has a long and exciting story, which I will discuss in more detail in Part V). It is said that a Hibernia cable should be faster than an AC1 cable with a saving of six milliseconds - which is why my book is called "6". At the same time, the Irish cable laying station Vigilant (in Brin, Somerset) is located far from AC1 station (White Sand Bay, Cornwall):



The Hibernia cable should start working in two years. If high-frequency traders can save six milliseconds with a fiber-optic cable, they will no longer use the services of AC1. It would be foolish to have radio-relay communication lines with such a large bandwidth and not to use at the same time a new cable technology that provides a higher transmission speed. This means absolutely all routes leading to Cornwall will cease their work in two years. A map will look like this:



Therefore, Jump Trading, Vigilant and Flow Traders have already ordered licenses / radio frequencies for laying new routes between Slough and Brin (Optiver may also be nearby), and Vigilant is waiting for the Hibernia cable to start working on such a long and elegant route:



I would love to talk with the Vigilant engineers who designed these routes. These people also have excellent neural networks.

Mckay brothers

Let's end with the McKay Brothers description. Even though Chicago-New Jersey radio-relay links were created by Windy Apple Technologies , led by Alex Pilosov, everyone believes that McKay Brothers are the fastest in the United States. This document , published by Aviat Networks (Aviat provides technology to most, if not all, HFT traders in both the US and Europe), reads the following: “ The network with low latency from McKay Brothers, LLC between Chicago and New York York is the busiest route in networks with low latency for financial companies ... ”McKay is now a very serious competitor in Europe. They are still working on their network, but I found towers to which they have already attached their antennas. One of the best routes they have lies between Liege and Sint-Pieters-Leeuw (in Belgium). Below is the only Belgian document that I found, with all the details about antennas installed by a private company (I analyzed more than 18,000 documents to find it):



So I would depict a 96.3 km long route between the two highest towers in Belgium:



The tower in Sint-Peters-Leeuw is the highest monolithic structure in Belgium (300 meters). Since McKay radio relay lines are the fastest in the United States, I would not be surprised if I found their antennas on this very tall building - the new “temple of capitalism.” I went to this building and took a photo of McKay's plates. Once again, the tower is surrounded by potato fields, and to the right of the base of the tower there is a small farm, with which the calf calmly watched me remove the tower. Norking .

Norking – , 24 . : « Norking Belgi , / , , , , . 300 ». , ( Norking ), , ( ) Norking Vigilant. , HFT- Norking .

-- . HFT-, , , :



McKay Brothers ( Quincy Data ): . – , « ». « » , (, 2.195 , McKay ) , ( NYSE ) ( - Equinix ). , – , . , CEO McKay Brothers ( , ). , McKay Brothers – . , ? It is hard to say.

Conclusion

– Latent Networks. . «» . , , . . . HFT- – Jump Trading. . IV Latent Networks.

….

PS If you notice a typo, mistake or inaccuracy of the translation - write a personal message and we will fix everything promptly.