Companies Pitch Shortwave Radio to Shave Milliseconds Off Trades

Cool! How do you figure? Doesn't shortwave take the great circle path, at lower altitude, making the path shorter?

It's also bandwidth right? What's the throughput on shortwave? I believe that Starlink promises mbps+. I imagine there are applications you can implement on higher bandwidth are more interesting?

Was Pilosoft always an HFT thing?

HFT firms make a lot of money...but space launch is even more costly. :(

This mechanism ("batch auctions") are not immune to rewarding low-latency connections. The details depend on the exact auction mechanism but the general idea is that you want to join the batch as late as possible (at any moment in time when you make a decision to join the batch, you are never worse off if you wait a while before joining) and low-latency connections can afford to join later.

In fact with your exact proposal, assuming everyone has a connection with at most (say) 50ms latency, no one will join the batch in the first 50ms, which (I think) magnifies the low-latency advantage.

Well, think through some toy examples. Suppose there is a market without order matching (again, toy example) and one market participant enters an extremely mispriced order, so the first person to fill that order wins. Even in the presence of random delays, the participant with the lowest-latency connection has a higher chance of filling the order than anyone else. (There are other anomalies, e.g. participants are now incentivized to have as large a number of distinct connections and hence "chances to roll low" on the randomized delay as possible).

wouldn't it be like this?

If the delays are randomized then you have as good as chance of getting them as your competitors. On delayed times you will have a bad chance of winning, but in comparison to others with the same delays your latency beats theirs, on non-delayed times your latency beats non-delayed competitors and really beats delayed competitors.

Thus in the end the best latency should win biggest on non-delayed trades, and on delayed trades lose least.

That's an interesting analogy, because I often find that the counterarguments sound a lot like techies arguing that encryption cannot have negative consequences.

>Imagine all the engineering being put into ads, tracking and hft instead of, I dont know, engine emission control or educational programs for kids.

Not everybody cares about those things, in fact I'd wager the majority of people I know in HFT would be bored to tears at the thought of working on emission control or children's education programs. What gives you the right to decide how other people should spend their time?

This is a sort of determinism built in to capitalist morality: If money can be extracted from something, then it is always good and just to do so. Natural, in fact.

(And to be extremely clear, I would say the same thing about pushing ads: just stop doing it. Walk away.)

> And well-functioning capital, labor, idea and resource circulation markets are at the very heart of that system.

Sure. But I'd question whether high-frequency trading is a necessary component of that, as opposed to regular-frequency trading. Same as I'd question whether things like collateralized debt obligations and interest-free loans were good for the housing market.

"Capitalist civilization" has changed in a number of ways since Reagan and Thatcher, just in its legal framework, compared to the thirty years before and I don't think it's obvious at all that we are better off in the developed world than we were in the fifties and sixties when things were more regulated.

When I look at stats for things like wage disparities, and the amount of money poured into marketing (demand generation), and the amount of frivolous products that the capitalist economy produces because it must by its nature constantly expand production, I quite honestly don't see efficiency and I certainly don't see reason.

Your idealistic vision of the stock markets doesn't hold well to the reality of the Fed literally price fixing everything under the sun so that we don't experience the biggest crash since 1929.

Right now there is no price discovery, all stocks are way overpriced.

While mainstreet is going in flames, wallstreet acts like everything is peachy and jumps on any rumor of a hint of a possibility that someone somewhere might someday have something that look like the possibility of a COVID vaccine (looking at you Gilead scam).

This won't end well (imo).

It would be much wider, because the dumber your pricing, the less certain you can be about how the price may move, so you have to be more cautious and quote wider.

>> I think having a penalty for buying and selling too often is a feature, not a bug : we want investors that think long term.

This already exists. It's the long-term capital gains tax reduction compared to short-term cap gains tax, and very high corporate taxes (relative to the rest of the world).

It benefits the majority of adults in the US and the vast majority of retirees who have exposure to stock vis retirement accounts. It has benefits to every pension fund, including teachers and public sector unions.

I could continue, but don’t poo poo things of which you don’t understand the components or utility.

>which has no social value

Who made you the global arbiter of social value? Clearly the people participating in the transaction see some value in it.

What's in Aurora? And why West Chicago in the original article?

Amusingly, I grew up 2 towns over from Aurora and live 3 towns from Carteret now.