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Comment by ortusdux | Hacker News Reader

Current fiber optic cables transmit signals at 2/3rds the speed of light. Modeling has shown that starlink's laser backbone would allow it to beat deep-sea cables in some situations. This article estimates a NYSE -> FTSE reduction from 76ms to 43ms. I wouldn't be surprised to learn that there is a HFT bidding war going on.

https://archmeregreenarch.org/1456/news/starlink-and-the-ris...

There is a newer version of fiber optic cable that uses a hollow core. Testing has shown it transmits signals at nearly the speed of light. It is very difficult to produce at scale and will require a generational shift to deploy.

https://www.nature.com/articles/s41467-020-19910-7

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Am I the only one who thinks HFT should be forbidden? Stocks and investments are a nice thing to have, since you can buy a share of a company you believe in, they get the money, do stuff, you get dividends and in the end can sell the stock after some time too.

HFT changes these "beliefs in company" to "beliefs that the stock will go up", and the timeframe of those "beliefs" is sometimes in milliseconds. This turns classic "investment" into a computer game with a lot of real money.

HFT isn't even that harmful. What's harmful is brokerages that hold large portions of financial instruments who take advantage of customers' live buying and selling with delayed swaps, intentional front running, etc. This is how the stock market was bullied before HFT, options markets, trading bots, etc enabled 'everyone' to do skeezy arbitrage and not just market makers.

The only meaningful way to limit the efficacy of these modern trading styles would be purposeful market friction through minimum holding times, circuit breakers, etc. You can't just legislate that people mustnt have low ping.. it's impossible to enforce. And those market friction mechanisms can create scary market conditions like backlogs, etc and guess what, enable market making brokerages to do internal swaps etc. in spite of the friction and essentially be the only ones able to bypass restrictions.

Wouldn’t a financial transaction tax be the friction required? https://en.wikipedia.org/wiki/Financial_transaction_tax

Yes.

> HFT isn't even that harmful. What's harmful is brokerages that hold large portions of financial instruments who take advantage of customers' live buying and selling with delayed swaps, intentional front running, etc

HFT does very similar things, except it's even more opaque to those not doing it. Large financial firms and exchanges sell their order data to HFTs. If you're interested in a deeper dive on what they're doing, a book like Flash Boys will explain how there's a lot more going on than just a quicker network connection.

How about forcing public markets to bucket trades within say 2 second windows, executing best matches at the end of each period. Low friction and reduces value of millisecond latency advantages.

Then there would be algorithms that analyze the trades in those buckets, make a prediction on the outcome and carry out several counter trades to put into the same bucket. See a lot of people selling, cancel your buy order and replace with a short instead. Get a few of those bots involved and each bucket window would be exploding dueling pits of orders that would require insanely large systems to process.

These problems are fixable. Use blind bidding, and ban spoofing by preventing order cancellation within a bucket. Too many orders? Set a per-client limit.

Most of this is improvable with software. As other commenters point out, the resistance is from incumbent trading institutions who have a lot invested in the status quo.

Blinding bidding would not work given the current way NMS works and it wouldn’t be completely blind either ways, the exchanges would know and that’s a system ripe for abuse.

What is an order cancellation? Would different legs on a hedge count as a cancellation?

The closing window is a massive challenge as well. It would have to be accurate down to the nano second and you can bet the exchange is going to get litigated against depending on which bucket the order ends up in.

If you set up mandatory delays per client you would have each hedge funds split up into hundreds of shell companies to get around it.

Having worked at exchanges, most surveillance and analysis of trades happen after the close of day. You’re proposing a literal real-time surveillance system that would be absolutely massive in scale.

It obviously works, given that many exchanges do have morning and evening auctions.

> The closing window is a massive challenge as well. It would have to be accurate down to the nano second.

It wouldn't have to be - one could even say first second is for bids, second second there are no bids but a delay to give auction results mid-second and allow people to process.

> the exchanges would know

They can be forbidden to sell that info real-time by their regulator (it arguably would be market abuse and that could be made explicit).

It is definitely not impossible like you are trying to imply. (Financial markets participant with 20 years in the market here, for what it's worth.)

Even a 1-2 millisecond batch auction would do it. But the big trading firms are the largest "customers" of exchanges, and they've pushed back hard on proposals like this.

>> The only meaningful way to limit the efficacy of these modern trading styles would be purposeful market friction through minimum holding times, circuit breakers, etc

So I occasionally try to think of a reason to have a guaranteed delay due to signal propagation delay to/from Mars. Would there be a use for putting an automated exchange there? Maybe, but then whomever gates the orders could monitor and predict what will happen 40 minutes out or whatever. Need TLS from trader to exchange or something.

You might be interested in IEX [0]. The idea behind that stock exchange was similar to your thought process - introduce a guaranteed delay / random offset so that HFTs can't exploit the markets the way they do others.

[0] - https://en.wikipedia.org/wiki/IEX

I agree. HFT goes against the original ethos of a market open to all. Instead of trading on the merit of a given company, it simply reinforces the market is increasingly gamified and unfair. It's like futures, no ones cares about the commodity being traded, or that doing so can really hurt people and business that rely on that item, it's just another item to be gambled.

> Instead of trading on the merit of a given company, it simply reinforces the market

What you're proposing is actually not a ban on HFT, it's a ban on investment strategies other than value investing. How would you implement that in practice? Have every investor swear under oath that they do believe in the company's inherent value, regardless of the rest of the market's behavior?

> HFT goes against the original ethos of a market open to all.

What "original ethos" is that? And even if it existed, wouldn't excluding certain investors go against it much more?

The how is not the issue, the why is.

And for the how, just limit the number of transactions one can do per second or the money one can exchange per second. Then everyone will have to be smart instead of being the one with the best connection. Or split the markets in "Joe invests" market and "Bigcorp" invests.

Whatever scheme is defined as "stock exchange" can surely be fixed by another scheme. Humans have been inventing games and agreed to rules for centuries, it's not like it's something we can't do.

Excluding the investors that have literally paid for an advantage sounds fair to me (buying real estate closer to thr exchange because every ns counts).

What would that look like? If you rate limit stock exchanges to something like 1 update per minute then there will likely be the same amount of networking and computation going on to speculate on the next update and calculate optimal plays. It just moves it to behind closed doors where it is harder to know if shenanigans are going on.

It would take a heavier hand to push against this problem. I'm all for it, I'm just not clever enough or knowledgeable enough to know what would be a good regulation that would fly in congress.

A few congress people put forth a bill that would add a 0.1% tax on trades. This would be a rounding error for most traders, but a significant value for HFT.

https://www.brookings.edu/opinions/congress-wants-to-tax-sto...

I wonder what happened to it.

Raising the financial transaction tax to 0.1%, 1$ per $1000 would eliminate the vast majority of unproductive and rent seeking HFT without negatively effecting liquidity. The US already has an FTT to fund the SEC, implementation should be straightforward. Currently the rate is very low, about 0.002%. Raising the rate would be minimally impactful for longer term investors and generate on the order of $50b a year for the government.

Hong Kong has an FTT of 0.13% currently, it was 0.1% from 1993-2021 so you can compare HFT impacts on these markets. Or compare dozens of other countries with similar rates, Switzerland, Taiwan, France, Italy, Japan.

Is the $50b/year figure estimated after assuming the 'unproductive and rent seeking' HFT volume is eliminated?

Yes, that estimate is with the greatly reduced HFT volume. And it may not be 100% accurate, HFT and trading in general could move to another market without these taxes and/or switch to a type of derivative with a lower/no tax. Like the UK, for swaps. But these other markets are smaller and not really a replacement. And these other markets may pass similar taxes in the future.

What's rent-seeking HFT?

Rent-seeking is an "economic activity to gain wealth without any reciprocal contribution of productivity". Or put another way it means societies resources are put towards wealth transfer instead of productivity/wealth creation.

Thank you; understood. I've just looked at the Wikipedia definition[0] as well, which is a little different, but I get the point you're making.

I haven't thought about this enough, but one thing I'd note is that HFT is risk-taking, and taking a risk generally has the possibility of profit or loss.

A second thing would be that the phrase "society's resources" is a bit dangerous, as it might let us think that the money they're using is somehow everyone's money. When in fact they're spending their money on this, hoping to make a profit.

[0] https://en.wikipedia.org/wiki/Rent-seeking

>A second thing would be that the phrase "society's resources" is a bit dangerous, as it might let us think that the money they're using is somehow everyone's money. When in fact they're spending their money on this, hoping to make a profit.

From the perspective of the whole economy it is everyone's money. Rent seeking behavior is a dead weight loss due to market inefficiency. Through tax policy the incentives can change and largely remove this inefficiency.

"Excess rent" is economics jargon for something akin to "selling something for more than its fair value". The idea with "rent-seeking" is therefore that of seeking opportunities to take advantage of or even create market distortions that work in your favor, allowing you to capture a greater share of surplus value than you would otherwise obtain in a theoretically-fair market.

How do HFT firms create market distortions that work in their favour?

I'm not making the assertion, I am just trying to clarify the terminology.

I'm not that person, but presumably it's that someone has purchased real estate in a geographically relevant location and constructed property on it/between it and the exchange which gives them an insurmountable latency advantage in HFT, and they are characterising the raking in of cash from that latency advantage as rent seeking.

do you have a link, love to learn how it worked out in other places

https://www.bnymellon.com/content/dam/bnymellon/documents/pd... has a good review of several countries laws

If you buy a stock, you must keep (hold) it for eg. 30 days (or 7, or 60, or whatever).

Compute all you want, whenever you want, but instead of millisecond timings, optimize stuff for at least some time.

Maybe even a tax on stock profits, which is really high and falls after some time of ownership of such stock (we have this in slovenia, but it's not really high in the first place, and time brackets go less than 5 years (25%), 5-10 years (15%), 10-15 years (10%) , 15-20 years (5%), and zero tax after that.

Adding this sort of friction would increase spreads. Market makers are a net positive for markets (who buys/sells when no one else wants to?), and I don't see any downside to allowing them to manage risk and trade quickly. I think the way to increase fairness is to change the way orders are matched.

Another way would be to allow higher price granularity to allow more competition on price rather than speed.

Even if you said you have to hold it for 3 hours that would cut against the worst of the HFTs

There already is a penalty for not holding and a tax on wash trading (selling and rebuying within 30 days.)

Then it probably wouldn't be hard to have increasing penalties for shorter durations, very especially sub-minute durations.

> What would that look like?

One attempt is the exchange IEX [0] which introduced a ~350 microsecond delay to everything simply by running incoming order data through a ~60km loop of fiber-optic cable.

Perhaps not the most, er, featureful solution, but it's very easy to audit and argue that there are no biases or backdoors.

[0] https://en.wikipedia.org/wiki/IEX

If everybody is exactly 350us slower, then it’s still the same game.

Iex also offers a variety of (dark) order types that can pull back without the 350us delay if iex believes the incoming flow will be toxic

> If everybody is exactly 350us slower, then it’s still the same game.

IANATrader, but I don't think that's entirely true. Yes, it won't stop Carol from getting information from somewhere and then running in front of Alice to the same exchange. [0]

However even fixed-delays [1] can still create uncertainty about what price your order may actually execute at when it hits the server, which is something HFTs rely on more heavily than other traders, since their strategy depends on high-certainty that they will have a small positive margin on every trade.

[0] I find it geeky-amusing to write (i.e. IEX) or (ex: IEX) because it feels like the start of a mental tounge-twister.

[1] Can't edit my original post anymore, but apparently there's another 350μs on the outbound path too.

> However even fixed-delays [1] can still create uncertainty about what price your order may actually execute at when it hits the server, which is something HFTs rely on more heavily than other traders, since their strategy depends on high-certainty that they will have a small positive margin on every trade

This is also true on every single other exchange, albeit to a smaller degree. You have a larger queue of possible things that may have happened, but this issue exists everywhere. No exchange has instant entry.

On a very short timescale things are very jumpy - nothing happens for a while, and then everything happens all at once. The queuing problem tends to be more of “did another hft beat me to the same event”, not general random other events, so queues like IEXs tend to be emptyish anyways.

What about a flat "Tobin tax" charged on each transaction so that it becomes very expensive to do lots of small trades quickly and encourages doing bigger trades at lower frequency?

https://en.m.wikipedia.org/wiki/Tobin_tax

The best solution I've seen is to do batch auctions every millisecond or so, and randomize matches within that window (for market orders or limit orders at the same price). You could use a longer window to include slower players in the market.

Limit trades to once per hour, then, and require a human to enter them.

Small cost per trade (tax/fee)

Minimum time between buying and selling the same ticker

Mandatory network 'speed bump' of a few ms between the exchange and any trading parties

In a healthy market, HFTs serve as market makers, and allow normal traders to have faith that prices will be consistent at all exchanges. If there is enough competition, an HFT will have very low profit.

What's the actual harm of HFT for the average person? I can set a $ limit on my orders, so I don't pay more than I want. Why should I care if some HFT guy scrapes 0.01% value off each trade?

It scrapes that % every trade, every millisecond, thousands of times over. That adds up, and all that money has to come from somewhere.

That's the price you pay for liquidity, and the alternative (paying a difference in price far more than 0.01%) makes everyone worse off except other people competing in the markets. The money HFT's make comes from other people trading the zero sum short term trading game, not you (assuming you are longer term investor or non-participant in the market), so why should you or others in your situation get worked up about it? It seems like either a demonization of that which people do not understand, a class warfare sort of vibe, or both.

It’s weird to be how much some people hate market makers and traders who apply arbitrage strategies. I don’t think there would be as much hatred for HFTs if people understood what it is they do. They make markets on securities and arbitrage things. For example, creating units of SPY when it gets too far above NAV to bring the NAV back in line with the index. I’m sure there are more strategies I’m unaware of, but it’s not like Millionaire HFT man is picking the pockets of retail traders, there’s real money to be made elsewhere.

I agree; it's as abstract as software but you can't really go to school to learn about it. It's more of an indictment of the tribal nature of humans and today's popular political narratives than of the intelligence of the OP's, who I assume are very smart. Deep-rooted emotions like jealousy and fear of the unknown can lead to shallow dismissals of complex and important systems.

It would be slightly amusing to see some sort of HFT ban, only to see people speedrun re-inventing HFT as numerous problems unfold, like dad putting in a market order for AAPL on a day it had a VWAP of $185 and having his trade execute at an average price of $690. Or more serious problems like shortages and surpluses of commodities in different locations due to bad price information.

This is referred to in the finance industry as 'picking up nickels in front of a steamroller'. It generally works out great for everyone until someone gets pulled under the steamroller, which can lead to an insolvency cascade.

Where do you think all your liquidity comes from when you want to buy or sell some instrument? The difference in price isn't all that substantial if all you do is buy now, sell when cash is needed in retirement, but if you're that kind of general index investor, one could argue that your contribution to markets is actually negative (whereas HFT is helpful by making prices better and spreads tighter). Buying SPX makes no differentiation between bad and good companies in the index and allocates money based on current prices (which are mainly calculated by HFT's who did the legwork to get to the current point).

Honestly, I don't understand how they're legal, either. HFT just seems like the most naked of naked cash grabs in finance.

This seems to be a common sentiment – but do you know what HFTs actually do, and why it works?

I was pretty skeptical too, but the more I look into it, the more it just boils down to market making (providing liquidity) and arbitrage (improving price quality across exchanges).

There might be dirty tricks there too – I'm only speaking for legal trading practices here. And if an HFT makes its profit using illegal methods, what's the difference between that and other financial crimes like insider trading, collusion to frontrunning etc.?

I don't really get the (to me somewhat irrational/uninformed) focus on HFTs, when things like payment for order flow probably "siphons off" just as much from retail investors' trades.

I have a suspicion that at some point, an HFT group will obtain a brief but substantial lead in machine learning (a la RenTech, but on a shorter timeframe) that allows them to suck a decent amount of money out of the stock market before anyone else can respond or close the gap. We probably won’t get any sort of regulation until after that happens.

Hft groups are about 15-20 years ahead of you on that

> HFT changes these "beliefs in company" to "beliefs that the stock will go up", and the timeframe of those "beliefs" is sometimes in milliseconds.

None of this prevents you from investing using whatever long-term paradigm you prefer. The effects of HFT on that investment style are negligible.

> since you can buy a share of a company you believe in

I don't think this is generally true. Stock trading isn't charity, it's done to make a profit. Almost trading is done on the basis of second order effects, and has been for as long as there's been a stock market. Stocks aren't given value by the company being profitable, they're given value by what other people are willing to pay for them (okay, yes, dividends also factor in, but many companies don't pay dividends and people still assign value to those stocks).

Well sure it's for profit, but what exactly do we (the society) get if we allow millisecond investments in our companies? Compared to classic, long-term investments.

We gain the same benefit all commerce creates: somebody wants to buy, somebody else wants to sell, both those people make a deal, both those people have fulfilled their wants. The seller is happy because they preferred cash to the stock, the buyer is happy because they believe they can sell the stock for more money later. What difference does it make if the buyer plans to sell in a second or a month?

The common answer will be "liquidity".

The honest answer is probably nothing.

Is liquidity even a real answer? The HFTs only work because the market would be made a moment later. A buyer and a seller already exist. If they didn't, it wouldn't be high-frequency trading. it would just be "trading".

As far as I can tell, it neither benefits us, nor costs us. It siphons off a tiny fraction of money, too small to notice, but large enough in aggregate. Some parasite gets to survive, which is annoying if you look directly at it, but ignorable if you don't.

> The HFTs only work because the market would be made a moment later. A buyer and a seller already exist.

Not at all. If you, for whatever reason, need to sell right now, putting in a market order in an illiquid market can cost you a lot.

It can be discussed how big the contribution of HFTs to market making really is (large companies or exchanges often employ dedicated market makers, I believe?), but the benefit of market making itself should hopefully be obvious.

Sure, liquidity is a good thing. But you only need enough liquidity to make your trade. Adding more provides zero benefit.

If the HFTs only trade when the market is already made (or will certainly be, milliseconds later) then they're not really adding any liquidity. They're just doubling the liquidity which was already sufficient.

> Not at all. If you, for whatever reason, need to sell right now, putting in a market order in an illiquid market can cost you a lot.

Are high frequency traders trading in illiquid markets?

That would be surprising to me, it's not high frequency if it's not high volume, and you open yourself up to larger bid/ask spreads.

Are HFTs taking trades that otherwise wouldn't have happened?

They fulfill different functions. Low trading delays make certain the difference between buying and selling price is low, and reduces differences in price between marketplaces. Both very good for people doing long term investments.

Liquidity, lower volatility, and lower transaction costs, for starters.

I am pretty sure HFT is the only reason the average joe can trade in the first place and can definitely say that X's stock is worth Y price. Otherwise you would have to trust the broker to give you a correct estimate.

Suppose I a (hypothetical) very low frequency value based trader buy a million dollars worth of Apple.

Apple should go up in price slightly, because someone (me) just made a big bet that it's going to do well. The market does this automatically.

TSMC should also go up in price very slightly, because Apple doing well makes it more likely that TSMC (a major vendor of theirs) will also do well, and the market just learned that Apple is slightly more likely to do well, so it also just learned that TSMC is more likely to do well. In other words the companies performance is correlated, so the stock prices should be as well.

By my understanding HFT is the mechanism by which the market can make TSMC go up slightly as well. High frequency traders can react to the information that apple is going to do better (as per it's increased stock price) and buy a bit of TSMC.

This seems like it should make the market more accurate, and if you buy that the market accurately assigning values to a company is a good thing, seems like a good thing.

But for you to buy a million dollars worth of Apple, someone sold a million dollars worth of Apple, right?

Sure, but assume for the hypothetical that the counter parties were a list of existing "I'll sell this much at this price" orders. I.e. they were existing information that the market already took into account.

Or 1 million people sold $1 worth of Apple. If you want to execute a large trade, you'd probably have to buy from several sellers, and (my limited understanding of the market is that) you'd do so by matching sell orders in ascending order, thus pushing the market value up.

No. It's garbage, trading is supposed to serve human needs and should take place on human timescales. If I had a magic wand I'd randomly fuzz the timing of trades to remove a lot of incentives for HFT and some other kinds of automated trading, which are not much more than banging on a known deficiency in a slot machine.

Proponents argue that HFT and other such innovations provide liquidity to markets; my skeptical take is that this is a nice technical-sounding term for traders with cash to lowball falling asset prices.

If you want to buy an apple stock now at say 185$ (at time of writing). What gives you the confidence that you can buy it at this price?

1. You could put a limit order at 185$ or lower. But maybe no one is putting a sell order at this price? So you are stuck waiting for some time, maybe never if the price keeps going up? 2. You could put it at 190$ to trigger a trade but you risk buying 5$ more than what you originally wanted if people already cleaned up the book from 185$ to 190$.

The only reason you can definitively say that an apple stock is worth exactly 185$ right now is liquidity/depth of the market. Because there are enough players in the game that is willing to make miniscule amount of profit in very short amount of time.

Yeah, that's the cost of doing business. If your business model depends on many many transactions with tiny margins, don't be a trader but become an exchange.

If you have not already looked into it, the Long Term Stock Exchange (LTSE) is trying to buck this trend and cater to patient capital.

> HFT changes these "beliefs in company" to "beliefs that the stock will go up"

No, this is the part most everyone gets wrong about HFT. These systems make money off of volume, not price. They don't care if the price is going up or down. All they care about is that they can capture a small price delta by facilitating a trade faster than someone else and they are willing to do so for smaller fractions of a cent which makes them more attractive to all market participants, including you and your retirement funds. Their concerns are orthogonal to investors and they compete with other HFT firms and market makers.

> you can buy a share of a company you believe in, they get the money, do stuff

I think that's only true for IPO shares which often aren't available to retail investors/gamblers like me.

> I think that's only true for IPO shares

Not quite: By buying shares in a company, you positively influence its share price, which reduces cost of capital for the company (in case it needs it).

Arguably, the difference in impact (in terms of enabling/steering companies to do things) between the IPO and secondary market these days is probably negligible compared to any two single private funding rounds.

Rather than prohibiting maybe HFT should be separate org and shareholders would have option to reallocate their shares from one to the other.

Eric Ries with his Long Term Stock Exchange for me really nailed this issue. HFT is the epitome of all the reasons why the LTSE is great.

HFT is one of the only ways you can make money directly by making computers go faster. Gaming and edge computing are the other ways.

Why should consenting individuals be forbidden from playing computer games with their own money?

The question isn't whether satellite links can beat deep-sea cables, it's whether they can beat shortwave.

https://sniperinmahwah.wordpress.com/2018/05/07/shortwave-tr...

And HFT setups are also nearly colocated with the exchanges I understand -- as close as they can get physically, so adding a hop to space and back may be adding quite a bit of distance.

I think the use case is signalling between exchanges for millisecond advantages in arbitrage trades, not for trading on a single exchange.

See https://spectrum.ieee.org/wall-street-tries-shortwave-radio-...

It would be relevant for transmitting information from different exchanges (NYC ⇔ London ⇔ Tokyo... etc), not going from the trading firm's systems to the exchanges. At a high level, the firms would be making money by helping markets on different continents synchronize faster.

This would be about reducing latency between these two exchanges to enable arbitrage opportunities the way I understood it.

Exactly. IEX exchange is relatively new, and their big innovation is that they use long spools of fiberoptic wire to delay their user's connections, thus creating an even playing field.

https://www.sec.gov/files/07feb18_hu_iex_becoming_an_exchang...

"The reduction in trading costs (spreads) is broadly consistent with recent theories on how speed advantages may be used to exploit mechanical arbitrage opportunities. These theories suggest that market makers face adverse selection from fast traders even in the absence of traditional “fundamental” informed trading. For instance, Budish et al. (2015) defnes “quote sniping” as the mechanical arbitrage of taking “stale” quotes before market makers can cancel. In his Comment Letter on IEX’s Exchange Application, Eric Budish argues that IEX’s speed bump may be able to mitigate quote sniping as it allows IEX’s pegged orders to avoid executing against market orders at stale prices.7 Moreover, cross-sectional di˙erences in spreads in response to IEX’s protected quote are consistent with recent theory suggesting that exchange speed is a double-edged sword for market makers (Menkveld and Zoican, 2016). On one hand, faster exchanges allow market makers to update their quotes faster, reducing spreads. On the other hand, higher exchange speed results in a higher probability of quote sniping. Hence, the results support this more nuanced view of the net e˙ects of speed on trading costs. "

How does it create a level playing field?

Everyone gets the same treatment. Everyone is delayed the same amount.

"Why is our market crashing" might actually have something to do with the price of tea in China soon.

How can that scale when they need to increase trading volume? Radio has jack shit in terms of bandwidth.

> require a generational shift to deploy.

Photonic bandgap / Bragg fiber is being produced in quantity, and some subsea cables are using it.

I'm pretty sure it's the satellite lasers that require the generational shift. One subsea cable has no bearing on any other; once the first is installed, you're up and running. not so with laser-connected swarms.

Photonic bandgap fibres are not used in submarine cables their loses are too high. There are recent antiresonant fibres (NANF) which can achieve lower losses than even SMF. However production capabilities are not ready yet to make the amount of fibre necessary for submarine. The startup (out of Southampton) that pioneered these was recently acquired by Microsoft.

We probably see these fibres for links between the exchange and data centres first (although there it is difficult to beat RF links, as they are direct line of sight)

Starlink's laser connections have been active for a year now.

[1] https://wccftech.com/starlink-turns-on-laser-satellites-for-...

Judging from [1], lasers are used not for inter-satellite links, but for downstream or upstream links - from satellites to the ground.

Intersatellite links require precise machinery, such as picometer-precise positioning systems [2].

[2] https://www.pi-usa.us/fileadmin/user_upload/pi_us/files/prod...

Also, there should be compensation for satellite rotation, initial targeting and tracking. At ~12km between satellites (~4000 on 550 km orbit), the (possible) target of laser signal receiver which, say, is one meter in diameter will be one third of an angular minute. It is not impossible to target that initially, but keep in mind that laser beam is very focused and its power drops significantly with the angular distance.

I really do not know how to even target satellites' receivers initially, let alone compensate for rotation and track these targets afterwards.

Don't read WCCFTech; they don't know what they're talking about.

AFAIK the satellites within an orbital plane are stationary relative to each other, so once the laser is aimed it should stay connected.

From [1]:

"Space lasers allow Starlink satellites to connect directly to one another, eliminating the need for a local ground station and enabling Starlink. to deliver service to some of the most remote locations in the world - like Antarctica."

What's the latency NY to Australia all over Starlink with laser interconnect now?

I don't know if Starlink is routing packets that way. I think it's more likely that they route packets to a ground station as soon as possible to save laser link capacity for customers that actually need it, like ones in the middle of the ocean. If you want your packets routed all the way around the Earth through space then you'd probably need a special contract with SpaceX.

Wouldn't they have to relay between many satellites due to line of sight? And wouldn't that eat up any decrease in time of flight for the signal itself?

I suspect that retransmission with amplification only, without much processing, can be really fast. Modern electronics can routinely do sub-nanosecond latency.

Indeed. If the system is designed with latency in mind, then the receive to send latency can be as low as a few feet of distance equivalent.

HFTs are in the nanoseconds range, not milliseconds... They rent space AT the exchanges... They remove firewalls and such to shave even more time

Only within the DC, not between exchanges.

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