US stock market daily report (February 12, 2014, Wednesday)
February 13, 2014, Thursday, 04:58 GMT | 23:58 EST | 09:28 IST | 11:58 SGT
Anova Technologies, a small communications company in Chicago, plans to switch on an array of laser devices in March, linking the data center for the New York Stock Exchange in Mahwah, New Jersey, with the data center for the Nasdaq Stock Market in Carteret, New Jersey. The move is set to feed the need for speed of high-speed frequency traders, allowing them to trade even faster. A deal is reportedly in the works between Anova and the NYSE under which the technology would be offered to their trading clients. Servers for computerized trading firms will need to place their servers at the data centers for the exchanges, to take advantage of the laser technology.
Michael Persico, founder and chief executive officer of Anova Technologies LLC said, "This is a never-ending race." The laser devices will involve harnessing a technology that U.S. military jets use to communicate as they soar across the sky.
The lasers, which will be perched atop high-rise apartment buildings, towers and office complexes along the 35-mile stretch between the two communities housing the data centers, will be phase one of the laser grid intended to link nearly all U.S. stock exchanges. 'Race to zero' is a term used by traders to allow completion of computerized trades to be processed in billionths of a second. Trade completions in nanoseconds can spell the difference between profit and loss in traders algorithm-driven trades. Zero is referred to as a holy grail for computerized trading meaning, a trade instantly completed .
High-frequency trading firms account for nearly half of U.S. stock trading and have adopted first custom-built fiber-optic cables, then microwave and later millimeter-wave transmission. Technology tying U.S. markets and International markets together, currently operates on fiber-optic cables laid across the oceans floor.
Anova, along with other communications companies have networking equipment at a data center at 1275 K Street in Washington, physically close to government agencies, for the edge of fractions of a second eliminated from the time it takes to transmit economic data released by the government. High-speed traders require laser moving speed of trades made, when government data is released.
Federal regulators remain wary of algorithmic high-speed frequency traders' relentless push for speed. High-speed trading resulted in the "flash crash" of May 6, 2010 when heavy selling and waves of high-speed traders fled the market, triggered wild stock swings. In August 2012, high-speed trading at electronic-trading firm Knight Capital Group Inc. was responsible for the loss of over $460 million in 45 minutes.