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February 14, 2014

Military Laser Technology Latest Edge In HFT Wars

“As the need for speed in high frequency trading (HFT) intensifies, with the difference between success or failure often measured in milliseconds, a Chicago company is now linking the NYSE Euronext (NYSE:NYX) with the NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) through laser technology used in U.S. military jets — and regulators watch developments with a wary eye.”

“This March a small Chicago technology firm, Anova Technologies, plans to install laser devices linking the NYSE Euronext (NYSE:NYX)’s Mahwah, N.J. facility with the NASDAQ OMX Group, Inc. (NASDAQ:NDAQ)’s Carteret, N.J. facility, according to a report in The Wall Street Journal.  With such a high speed link between the two stock exchanges, HFT firms, operating with a millisecond edge, will be able to more effectively execute spread trading strategies that buy a stock on one exchange and sell the same stock on another exchange, benefiting from momentary price discrepancies between the two trading platforms.  The new technology is said to reduce the delay between traders on each exchange to the speed of light.”

“The WSJ article comes on the heels of another article from the newspaper noting that HFT firms are receiving market moving data such as earnings reports before general investors.  The article said HFT firms receive early earnings releases through Business Wire and the ADP monthly employment report.”

 

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Read full Valuewalk article here.

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