London Stock Exchange prepares millimetre wave trading link
The LSE’s new millmetre wave technology will be useful to HFTs
The London Stock Exchange is planning to roll out a new millimetre wave wireless communication link between its data centre in the City of London and the Equinix data centre in Slough, in a deal that will provide faster access and benefit HFT firms looking to arbitrage between multiple trading venues.
Millimetre wave is a form of radio wave technology that provides an alternative to fibre-optic cables laid underground. Wave communication involves line of sight links from point to point. Millimetre wave has a high bandwidth, enabling greater quantities of information to be sent over shorter distances.
The Slough data centre is home to pan-European multilateral trading facility BATS Chi-X Europe – so in theory, the new link can be used by latency-sensitive traders to minimise the time between trading on one venue and the other – a useful ability if trading based on momentary price differences between stocks listed on both platforms. The new service is due to launch in November, and promises to be 30% faster than a fibre-optic connection. It will be available, for a fee, on a similar basis to other services such as hosting services.
“This initiative underlines London Stock Exchange’s commitment to developing innovative products based on new technologies, enhancing opportunities for customers seeking low latency data and trading solutions,” said Nigel Harold, head of IT business development at the LSE. “Through the use of millimetre technology, a wireless communications link will allow participants to more efficiently manage activity across multiple venues. This service highlights how our markets and products are constantly moving forward, developing and evolving with advancing technology.”
Recent months have seen the launch of several connectivity improvements across Europe. In September, TMX Atrium released a set of options for trading Russia through its connection to Frankfurt’s Equinix FR2 IBX data centre and the Moscow Exchange – a move designed to shepherd customers as rival providers stake out their own claims to the Russian market. The LSE is widely known for its International Order Book, which primarily consists of Russian companies that have chosen to IPO in London to gain from the relatively safe legal environment.
Meanwhile, other firms such as Colt are currently exploring whether microwave, which carries data faster over longer distances but has less bandwidth than millimetre wave, can be used to provide a latency advantage from point to point. Some industry observers speculate that the technology could be used to bridge the latency gap between both sides of the Atlantic. However, at present the technology is being used in the US to connect New York with Chicago, in a link which launched in May 2013.
