If you thought that stock traders made enough money, and wielded enough power over the global economy, think again: Financial traders are now turning to high-speed laser networks between stock exchanges, to decrease latency by a few milliseconds, to squeeze a few more trillion dollars per year out of high-frequency trading HFT. HFT is performed by computer systems that are attached directly to stock exchanges. These HFT computers are armed with algorithms devised by the finest brains in the world really , which constantly scan the market for securities stocks that can be bought low on one exchange, and sold high on another exchange, usually netting just a fraction of a cent per trade.

Do this thousands or millions of times per day, though, and HFT can make a lot of money.

Furthermore, by improving the speed and accuracy of the algorithm, traders can make billions — by having a lower-latency link to the stock exchange than their competitors, a financial firm can make trillions. Which leads us neatly onto low-latency network links. While the added redundancy of these new links is nice, the biggest customers are expected to be financial traders who stand to make millions from the lower latencies.

Free-space microwave networks, and soon free-space laser links.

Perseus Telecom recently completed a microwave link between London and Frankfurt that reduced the round-trip latency to just 4. By cutting the distance traveled, and not having to jump through possibly-congested routers, latency drops dramatically. It would be a most unsatisfactory if a bit of drizzle in London halted trading.

Which is where lasers come in. According to AOptix, its laser network technology has the reliability and capacity of fiber optic networks, and the low latency of microwave networks.

AOptix started off as a US defense contractor, creating a laser-based system that allows for 10Gbps air-to-ground networks over a distance of kilometers mi. Now it wants to bring this technology to the consumer market, supercharging mobile backhaul links connecting carrier towers to each other, and to the main backbone and financial trading.

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By combining adaptive optics and beam steering to account for swaying towers , AOptix says its laser links work in all weather conditions. AOptix hopes to roll out some short-range laser links in the US and UK, and then follow up with a London-Frankfurt laser link in the future.

What about longer wireless links, though? If London-New York could have its latency halved like London-Frankfurt, it would be a revelation in high-frequency trading. Drones with high-powered lasers. What could possibly go wrong?

High-Speed Stock Traders Turn to Laser Beams - WSJ

The secret world of submarine cables. Now the terrorists only need a mirror and they can steal the high powered laser beams to blind the pilots of planes coming in for landing. Otherwise it has no positive said beside rich getting richer like the last 30 years. The Economists, who tend to be a clutch of competing market evangelists, are still on the Fence as to the long term effect of current computerized nanosecond trades on the actual purpose of a Stock Market.

The industry is rapidly shrinking and estimated annual gross profits are on the order of low tens of billions of dollars. Barring the creation of a time machine, no new technology will all of a sudden change this to a trillion dollar industry.

Arbitrage remains a opportunity with limited scale. New technologies simply add to the already high operating cost to compete as all the hft firms eventually adopt them, but they do not provide any unique edge over competitors.

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Lasers, microwave deployed in high-speed trading arms race | Reuters

Home Computing High-frequency stock traders turn to laser networks, to make yet more money. High-frequency stock traders turn to laser networks, to make yet more money By Sebastian Anthony on May 3, at 7: Now all I need is some money…. And a cracked copy of the trading software!

And the insider trading info they all use by being on the know. Why settle for drones with lasers, when you can have sharks???

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