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How lasers will make financial trading even faster

Posting in Government

Much of the financial trading on Wall Street and around the world is done by computers, not humans.

With high-frequency trading, firms use complex algorithms to exploit price discrepancies in the stock market. All of this trading happens in a flash, microseconds. (Radiolab has a good episode explaining this financial trading phenomenon.) Dealing in microseconds means companies need to have the fastest technology to complete their transactions. Superfast fiber-optic networks were the hot technology, then microwave networks came along, and now: lasers?

That's the vision of the two companies Anova and AOptix. The companies say a laser network, built from technology developed by the U.S. military to improve communication between jets, would be as fast as microwave networks and as reliable as fiber-optic networks. As BBC reports:

Initially the system, which combines lasers and wireless dishes, will be rolled out on short-range US and UK networks, with the first long-haul route between the UK and Germany being added later.

Shaving microseconds off trades has become like an arms race for trading firms. Meanwhile, the public looks on weary as incidents, like the AP hoax, can briefly cause the U.S. stock market to plunge before recovering minutes later. But unless government regulators slow down high frequency trading, the trades will only get faster; lasers certainly won't be the summit.

Financial traders turn to lasers for faster deals [BBC]

Photo: Flickr/Mathew Knott

— By on May 6, 2013, 12:04 AM PST

Tyler Falk

Contributing Editor

Tyler Falk freelance journalist based in Washington, D.C. Previously, he was with Smart Growth America and Grist. He holds a degree from Goshen College. Follow him on Twitter. Disclosure