Let a Thousand Wall Streets Bloom: Study Pinpoints Optimal Spots for Playing Financial Markets
Ehrenberg, Rachel, Science News
Forget the trading floor--in the future, an empty lot in Uzbekistan or a barge anchored miles off Chile's southern coast may be the most lucrative spot for playing the financial markets. A new analysis identifies the optimal locations between the world's major securities exchanges for gaming the speed of light.
In today's markets, computers search for and act on relevant information in a flash, sending orders through fiber-optic cables at nearly light speed. By buying or selling shares split seconds ahead of the rest of the market, holding stock for mere moments and then doing it all again, high-frequency traders are turning fractions of pennies into piles of dollars. To trim time, some firms even place their computers as close as possible to an exchange's, a practice called "colocating" that cuts data travel time, giving some traders an edge.
But to exploit the 50-odd milliseconds it takes for information to cross the Atlantic, the sweet spot isn't always at the exchange's door. …