Meanwhile, Over At The "New York" Stock Exchange... Lasers

Tyler Durden's picture

The last time we looked at the most important tower in the world, about 4 months ago, it looked as follows:


The tower in question is the primary microwave relay into the ill-named "New York" Stock Exchange which actually is located just off MacArthur Boulevard and Route 17 in Mahwah, New Jersey, and in our opinion is the "most important tower" in the world, because without it, the financial industry, which these days means a few hundred thousands HFT algos and their math PhD creators, would grind to a halt as suddenly trading would revert back to the "caveman days" of 2007, when one actually traded not just to frontrun a whale order in some dark pool half way around the world, but actually cared about such things as "fundamentals" and "reality" (oh, and there wasn't some $12 trillion in cental bank created liquidity supporting every asset class).

The reason we bring up said tower, is because over the past several weeks there has been some furious work by engineers hanging off said tower some 100 feet in the air, resolutely adding a particular device to the primary microwave relay tower at the NYSE.

The device in question has been highlighted:

What is said new device? Extremetech explains:

High-frequency trading — the practice of making thousands of algorithmic stock trades per minute — is about to get a big boost in the USA. Anova, a company that specializes in deploying low-latency networks for stock trading, is completing an ultra-high-speed laser network between the New York Stock Exchange (NYSE) and the NASDAQ. The link will be just a few nanoseconds faster than the current microwave and fiber-optic links — but in the world of high-frequency trading (HFT), those nanoseconds could result in millions of dollars in profits for the trading companies. Such is the insanity of the stock markets; such is the unbelievable capacity of HFT to create money out of almost nothing.


If you want to get a signal quickly from point A to point B, you basically have three options: fiber-optic cables, a network of microwave dishes, or laser links. Electrical (copper wire) networks are feasible over short runs, but their reduced functionality and bandwidth over longer runs makes them less desirable than fiber. Microwave (and even higher-frequency millimeter wave) networks also aren’t very high-bandwidth, but because they’re purpose-built, they can take a very direct route, significantly undercutting the latency of an oft-congested and round-about fiber network. Laser networks have all the advantages of microwave/millimeter wave networks, but they have higher bandwidth, and some very clever adaptive optics means they’re not impacted by bad weather. (Microwaves really hate inclement weather.)



Last year, Anova completed a laser network link between the London and Frankfurt stock exchanges, and now, it seems the company is nearing completion on a similar laser network between the NYSE and NASDAQ data centers in Mahwah and Carteret, New Jersey. In the case of both networks, Anova is using equipment provided by AOptix, an American company that is contracted by the US military to produce similar laser-based systems for ground-to-aircraft communications. Each AOptix base station is capable of “carrier-grade” availability (five nines, 99.999%) over a distance of 10 kilometers (6.2 miles). The route, which is about 35 miles as the crow flies and skirts the center of Newark, will probably feature around six or seven base stations, each of which will have a direct line of sight with its two nearest neighbors. The link speed, according to the AOptix tech specs, will be around 2Gbps — not exactly massive by fiber-optic standards, but more than enough for a few thousand trades per second.


The cost of building the network won’t have been cheap — probably a few million dollars — but that’s absolutely pennies for stock traders. (The new fiber link between London and Tokyo, which is also primarily for stock traders, will cost $1.5 billion.)


The exact latency improvement of the NYSE-NASDAQ laser network isn’t yet known, but over a distance of just 35 miles we’re probably talking about nanoseconds. A microwave system currently in place between Chicago and NYC — a straight-line distance of around 800 miles — has a latency of 4.13 milliseconds. Scaling that down to 35 miles (dividing it by 23), you get a latency of 0.18 milliseconds between the NYSE and NASDAQ. I don’t know how fast the existing fiber/microwave links are, but even a difference of a few nanoseconds would be enough to beat out other high-frequency trading companies that are using older, slower networks. Anova, unsurprisingly, says it has dozens of trading firms who want to use the new laser network, all of which could stand to boost their profits. Though, as with all HFT technology, once everyone is using it (or something comparable) profit levels will revert.


And thus the craziness that is high-speed trading continues unabated, faster and more profitable than ever before

And some more from the WSJ:

In 2011, Mr. Persico read an article in a trade journal describing how a Silicon Valley company called AOptix Technologies Inc. had designed military technology using lasers to communicate in battlefield conditions. His first thought: "I wonder if they can put those on a tower?" The technology traced back to the 1990s, when two scientists designed a method to gather images from outer space that corrected for atmospheric distortions. They developed technology for telescopes with flexible mirrors that could adjust thousands of times a second.


Soon, they realized the technology could also be used to transmit data using lasers. They formed AOptix and contracted with the U.S. government to provide communication devices for military aircraft.


Mr. Persico asked AOptix whether its laser system could be used to send stock-market data. The company was confident it could, because stock data would only have to move from one fixed spot to another.


"Finding a tower isn't hard for us, because we can find airplanes" with the lasers, said the CEO of AOptix, Dean Senner.


Mr. Persico wasn't the only one who thought of adapting the lasers for stock orders. Several Wall Street firms also reached out to AOptix. After weighing offers, AOptix signed a deal with Anova in December 2012, partly, it says, because Anova had backing from a large Wall Street bank. The bank's identity couldn't be learned.


* * *


Some question whether Anova's lasers will provide a meaningful speed improvement over networks that are already in place, since microwave and millimeter-wave order transmissions also travel at near light speed. "The difference between networks is getting very small in the metro areas," said Stephane Tyc, co-founder of McKay Brothers LLC, an Oakland, Calif., company that provides fast trading networks. Still, firms such as Anova continue pushing to boost traders' speeds by increasingly tiny slivers of a second.


High-speed, computerized firms today trade everything from stocks to oil futures to government bonds, including securities whose prices move instantly when the government releases economic data such as jobs reports. To pare precious fractions of a second off the time it takes to transmit such data, Anova and other communications companies place networking equipment at a data center on 1275 K Street in Washington, physically close to government agencies.


In the latest tactic, some high-speed traders obtain news releases directly from distributors, avoiding the tiny time lag involved in going through the financial news media.



"We must think about why this technological arms race is happening and whether it poses any threats to our markets," said Kara Stein, a commissioner of the Securities and Exchange Commission, in a speech in November. "And we should candidly assess the costs and benefits to both investors and businesses."


The Treasury Department's Office of Financial Research in December labeled high-speed trading a "key source of operational risk across all markets."

* * *

"Speed makes markets way more efficient," said Peter Nabicht, a former high-speed trader who is now a senior adviser to Modern Markets Initiative, a trade group.

* * *


Mr. Persico set about securing rooftops and other spots to place his lasers between the New Jersey communities housing the NYSE and Nasdaq data centers. Anova said it has dozens of trading firms waiting to try the lasers when they go live. One firm that plans to use the system is XR Trading LLC of Chicago. It is a "very compelling technology," said XR's president, Matthew Haraburda. He said if it behaves as intended, it could be "a huge development" in trading technology.

In other words, everyone who splurged on the "brand-new" as recently as 2013 microwave technologies to give their HFT system a leg up... is now obsolete.

Welcome to lasers: where you are either part of the very expensive club, or are being frontrun. Which also means that if Michael Lewis is indeed writing a sequel to Flash Boys focusing on microwave signals and towers as the "next big thing", he may just want to burn the manuscript. As for what comes next:

Some dream of a replacement for the fiber-optic cables across the Atlantic and Pacific. The idea: Turbocharge intercontinental trading by floating balloons carrying microwave dishes over the ocean.

And that, ladies and gentlemen, is what "trading" has become.

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MarketAnarchist's picture

We should attach mirrors to drones and interrupt the signals.

hal10000's picture

Or wait for the inevitable pigeon shit.

El Oregonian's picture

Laser? My dog LOVES lazers. He goes and does crazy things chasing its light... Kind a' the same thing, right?

SoilMyselfRotten's picture

This was the fix to that one trading day loss

Silver Short Seller's picture
Silver Short Seller (not verified) SoilMyselfRotten Mar 1, 2015 9:11 PM

pfft typical ZH beatup. There's always been front-running and a middle man for as long as markets have been around. The only reasons speed is becoming more important is because HFTs are competing amonst each other. The faster HFT firm wins, which leads to a speed arms race.

SoilMyselfRotten's picture

Most don't put out that much excrement

Tall Tom's picture

Why are they installing LOSERS over at the "New York" Stock Exchange???


Don't we have far too many of those as it is?


Uh...Lasers? Uh..Okay..I see...mevermind.



Cognitive Dissonance's picture

Nothing to fear folks. That's just Wall-E's little brother hanging around some random telephone pole getting some fresh air. We now return you to your regularly scheduled programming.



Anusocracy's picture

All to jump through Fed hoops quicker.

Manthong's picture

Nice tech upgrade for Wall Street’s war on Main Street.

Pool Shark's picture



All this HFT crap could be solved with one simple rule change:

Once placed; ALL orders must be good for 1-second.


This would eliminate all spoofing and take all the profit out of HFT.

For this reason, the exchanges will never do it...

NoDebt's picture

The real front-running happens the old-fashioned way.  Hours or days ahead of time, for those politically connected enough to get "material non-public information" long before it's released.  

Not that there's anything wrong with that.  (If you work for Congress.)


SafelyGraze's picture

before there was wally, there was short circuit

and remember .. don't do crack!!!


jbvtme's picture

back in the day in order to "trade" a currency you had to gallop a horse overnite, cross the english chanel in a sail boat and board the steed again  then press on to the london stock exchange.   to complete the ruse, whisper in the rothschild agent ear: "napolean lost. short the sterling".  ah! the good old days when waterloo and high finance was such sweet romance compared to these new fangled algos and lazer beams....

TahoeBilly2012's picture

Skiing Sun Valley you assholes! 

Georgia_Boy's picture

"After weighing offers, AOptix signed a deal with Anova in December 2012, partly, it says, because Anova had backing from a large Wall Street bank. The bank's identity couldn't be learned."

The bank was covering its face with one of its tentacles, we couldn't tell which one it was.

giovanni_f's picture

This is legal muppet-looting. It is insideous - for a market-participating muppet cannot avoid it, doesn't even know that it is being looted in each and every trade.  It is a fee that does not show up on the muppet's trade balance.

But as long as the muppet's residual self-image is happily unaware of its physical substrate being constantly ass-penetrated, everything is just fine in the powerplant.

Four chan's picture

just try to front run a laser.

williambanzai7's picture

Give credit where credit is douche, this moron is more than just your run of the mill asshole:

Silver Short Seller

Silver Short Seller's picture

Personal information


Laughing all the way to the bank as silver tanks. Why? ZH was wrong on the stock market, on gold, on hyperinflation, on Greece, on ebola (more to come)... but do you see the pattern here? Being a permabear is just another bias which will result in poor predictions.

Is there a site that is the opposite of ZeroHedge?:

Yoel Glickstein is my name and financial markets is my game.

ZH was wrong about German gold repatriation:


Relationship actions


Member for
17 weeks 3 days

GetZeeGold's picture



Yoel Glickstein is my name


Cherokee Indian linage? Wonder if he's related to Elizabeth Warren?

Multi's picture

He may be a jerk I don't know, I don't track peoples' comments, but in this "There's always been front-running and a middle man for as long as markets have been around." He's 100% spot on.

Wanna get rit of lasers and algos front running you? well then you'll get front ran by your friendly floor trader ole style. Only problem, It will be mor expensive...   FOR YOU.

Isotope's picture

"Some question whether Anova's lasers will provide a meaningful speed improvement over networks that are already in place, since microwave and millimeter-wave order transmissions also travel at near light speed."

WSJ reporter doen't understand physics (surprise).

1. They all travel at the speed of light, just not the speed of light in a vacuum.

2. The issue is not speed, it's bandwidth. Higher frequency EM radiation, like conventional lasers and near visible light lasers, have an inherently greater data transmission capability than microwaves. X-ray lasers have even greater theoretical bandwidth, if you could make one that would be practical to use like this. I know, I know, don't give them ideas.

Stuck on Zero's picture

So true.  Think about a nanosecond a foot for propagation delay.  The extra bandwidth provides greater bid/ask/settle information input into the algorithmic machines.  Most of these machines are difficult to program FPGAs (VHDL, Verilog) but they have high-bandwidth.  

cheech_wizard's picture

>Most of these machines are difficult to program FPGAs (VHDL, Verilog)

There are days some of you make me want to scream. The programming is the simple part. It's writing out the design in verilog or vhdl that is what is difficult. Go to the Xilinx or Altera or Microsemi/Actel and you can download free or student level software. They even provide sample vhd/verilog files to play around with. Now I've worked with microprocessors for a long time, but in my new job I have to write test programs for FPGA's/CPLD's all the time now. I learned all the software tools in under a month. Design is not what we do, but we do use simple designs to test the maximum number of I/O's... Once you have your design you ask the software for a programming file. Then you use a bench programmer or even a chip tester. The things are primarily programmed through the JTAG port, but there are other ways...

>but they have high-bandwidth.

Bzzzt, sorry, not entirely correct...Generally speaking, while they may run fast internally, but a lot of them are still speed limited based on Tsu (set-up time) on the I/O's... FPGA's are useful in rapid prototyping but if you want real speed, eventually you'll go to a custom SOC design.








chubbyjjfong's picture

Congratulations. I bet when you shit a brick and block your toilet, you'll still need to call a plumber. 

cheech_wizard's picture

Congratulations, you were born in an age when no one taught you how to do jack shit and you couldn't be bothered to learn because you think fiat solves everything. I'm from a different generation. We actually can fix the toilet. And when all else fails, I call my stepson. He's the plumber in the family and does it for free.

tired1's picture

Lasers and microwaves are complimentary in terms of precipitation. Microwaves are absorbed by rain - lasers arent. Lasers dont like snow - microwaves dont mind.

For more than you ever wanted to know about these prinicples, or if you have trouble getting to sleep, try reading Crane's Rain.

Graph's picture

"Flash Boys" was entertaining and coveribg the HFT topic.

Graph's picture

"Flash Boys" was entertaining and coveribg the HFT topic.

Fred Hayek's picture

You make it sound as though, because the HFT firms are competing against each other, they're only taking each other's money, as though the Gambino and Luchese crime families only took money from each other.

willwork4food's picture

At least we are employing American labor.

NidStyles's picture

I wasn't aware that computers had obtained citizen status.

Reptil's picture

Why not? If a corporation can be a legal person, why not a complex entity like an AI controlled site like the one in Utah?
We're so fucking fucked!

LongMarch's picture

 There's always been cheating and a scammer for as long as markets have been around. The only reasons scamming is becoming more important is because HFTs are scamming amonst each other. The faster scammer wins, which leads to a speed scam race.

There fixed it for ya.

Thirst Mutilator's picture

 "The only reasons speed is becoming more important is because HFTs are competing amonst each other."


Well it would appear in this case, HFT's might be comepeting against someone's scoped M1A

Shad_ow's picture

Guess they couldn't screw us fast enought the old way.

clymer's picture

10GB fiber without the cable. Open-air data transfer. If only the black hats had the means to beat the encryption protocol, oh the fun they could have..

Proofreder's picture


can you say blindmen make no trades ...

unbeing's picture

Slingshot plus the results of last night's vindaloo would rather appropriate.

Chump's picture

We're talking New Jersey, isn't that a felony?

Snoopy the Economist's picture

10G is legacy stuff. We are now selling 100G systems and developing 400G now.

cnmcdee's picture

I can already see where this is heading - competitors on the slower networks getting shafted will be just *too* tempted to buy the local 12 year old a drone and a $500 bonus if he can knock that laser out of alignment <right before...> earnings reports comes out..

Either that or some drone drops a loaf of bread on it, once the shit hawks and ravens find it they'll sit and shit and peck all over it blocking the laser (the the profits of the top algo traders) drowned in sea gull shit..


Tall Tom's picture

Shoot a high energy laser at it...

BLOTTO's picture

Whatever the fuck it aint friendly.