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Shortwave Trading: The West Chicago Tower Mystery

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Re: Shortwave Trading: The West Chicago Tower Mystery

#61

i have one question: why expend some much energy on unearthing obscure stuff that has relevance only to a very small subset of a very small industry and literally nobody else? seems like a waste of effort.

Because it's interesting to someone.

I don't understand why my girlfriend likes to watch Youtube videos of other girls doing their make-up and hair but, then again, she doesn't understand why I need all the computers that I have.

Re: Shortwave Trading: The West Chicago Tower Mystery

#62

I'm not even remotely involved with the HFT world, but I can't think of any good reason why they'd want to receive "shortwave" signals from Europe in Chicago. Short-haul microwave links for low latency and high bandwidth, yes, but at shortwave frequencies you are literally talking about BITS per second. TFA says "Think dialup speeds" but this is lower than even dialup! They certainly aren't receiving any meaningful a…

The crucial information is up and down ticks of the ES-mini futures at the Chicago Mercantile Exchange. These lead the S&P500 (SPY) index funding in NYC (by 4 milliseconds), and the ES-mini ticks up and down about once per second. This few bits of information carries huge value since much of the world's equity market responds to it. See https://arxiv.org/abs/1302.5966

Re: Shortwave Trading: The West Chicago Tower Mystery

#63
This was covered pretty extensively by Crain's Chicago Business. Some companies are so obsessed with this sort of thing that they'll pay half a million dollars to move a receive site across the street. They measure results in picoseconds. Too much pressure for me.

Re: Shortwave Trading: The West Chicago Tower Mystery

#65
One has to wonder if this cutthroat competition will ever turn aggressive. Someone with a SDR and a bit of knowhow could shutdown/jam these systems very easily. The apparatus is in public view and they don't seem to be guarding their trash. A well-timed attack on a couple of these towers would create a few seconds of instability on the markets, enough time for another HFT platform to take advantage.

A blast from a 1-watt transmitter parked across the street would overwhelm any signal coming from across an ocean. Try calling the cops about to complain that your antenna reception is being interfered with. The days of cops hunting rogue radio stations are long gone.

Re: Shortwave Trading: The West Chicago Tower Mystery

#66

I'm not even remotely involved with the HFT world, but I can't think of any good reason why they'd want to receive "shortwave" signals from Europe in Chicago. Short-haul microwave links for low latency and high bandwidth, yes, but at shortwave frequencies you are literally talking about BITS per second. TFA says "Think dialup speeds" but this is lower than even dialup! They certainly aren't receiving any meaningful a…

It's not amount of data but latency. A signal to buy is just one bit, but you need to get it before everyone else does.

Re: Shortwave Trading: The West Chicago Tower Mystery

#67
> It showed a direct link between the West Chicago tower and another tower right by the Chicago Mercantile Exchange!

It's pointing at the top of 10 South Canal, one of downtown Chicago's main tombstones for data communications. The building has 3-6 foot concrete walls, no windows for the first 23 stories and was reportedly designed to withstand an overhead nuclear blast. The standing joke used to be that if Chicago were nuked you'd still get a phone bill because of that place.

There's a lot of underground fiber in that area too. Including 24-count bundles mounted near the ceiling of the old underground tunnel delivery system -- the one that accidentally flooded during the 90's. They were installed by Metropolitan Cable back in the late eighties/early nineties during the "politically connected" fiber gold rush to replace dedicated copper with light.

It would not be speculation to think there's fiber running directly from the MERC to 10 South Canal or that the MERC's location near 10 South is a coincidence.

The line-of-sight out to Aurora is interesting too. There are high spots out there with tower clusters reminiscent of East Texas in the 1930's. I believe there are backup trading centers out there as well built after 9/11.

Re: Shortwave Trading: The West Chicago Tower Mystery

#68
I recall seeing I think on 60 Minutes HFT that wanted worse latency but I can't recall why. They have massive spools of fiber optics using them as a "resistor" (my term) to slow down the transmission.

It seems to be the opposite of this but for the life of me I can't remember the advantage of doing it.

Found it: https://www.theatlantic.com/business/archive/2016/06/iex-app...

Re: Shortwave Trading: The West Chicago Tower Mystery

#69

I recall seeing I think on 60 Minutes HFT that wanted worse latency but I can't recall why. They have massive spools of fiber optics using them as a "resistor" (my term) to slow down the transmission. It seems to be the opposite of this but for the life of me I can't remember the advantage of doing it. Found it: https://www.theatlantic.com/business/archive/2016/06/iex-app...

I think you're referring to IEX, an exchange that adds a delay with those spools of fiber optics. According to wiki, "350 microsecond delay adds a round-trip delay of 0.0007 seconds and is designed to negate the certain speed advantages utilized by some high-frequency traders".

https://en.wikipedia.org/wiki/IEX Edit: didn't saw your edit.

Re: Shortwave Trading: The West Chicago Tower Mystery

#70

> It showed a direct link between the West Chicago tower and another tower right by the Chicago Mercantile Exchange! It's pointing at the top of 10 South Canal, one of downtown Chicago's main tombstones for data communications. The building has 3-6 foot concrete walls, no windows for the first 23 stories and was reportedly designed to withstand an overhead nuclear blast. The standing joke used to be that if Chicago w…

Correction: Metropolitan Fiber not Metropolitan Cable. Ultimately purchased by WorldCom.
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