The $300m cable that will save traders milliseconds

In the high-speed world of automated financial trading, milliseconds matter. So much so, in fact, that a saving of just six milliseconds in transmission time is all that is required to justify the laying of the first transatlantic communications cable for 10 years at a cost of more than $300m. 

 

A Global Marine Systems undersea cable vessel 

Seabed survey work for the Hibernian Express, as the 6,021km (3,741 mile) fibre-optic link will be known, is already under way off the east coast of America.

The last cables laid under the Atlantic were funded by the dotcom boom in the 1990s when telecoms infrastructure firms rushed to criss-cross the ocean.

The laying of the new transatlantic communications cable is a viable proposition because Hibernia Atlantic, the company behind it, is planning to sell a special superfast bandwidth that will have hyper-competitive trading firms and banks in the City of London and New York queuing to use it. In fact it is predicted they will pay about 50 times as much to link up via the Hibernian Express than they do via existing transatlantic cables.

The current leader, Global Crossing's AC-1 cable, offers transatlantic connection in 65 milliseconds. The Hibernian Express will shave six milliseconds off that time.

Of course, verifiable figures are elusive and estimates vary wildly, but it is claimed that a one millisecond advantage could be worth up to $100m (£63m) a year to the bottom line of a large hedge fund.

Some City experts have criticised the growth in vast volumes of electronic trading, where computers automatically buy and sell stocks with no human input.
The British firm laying the cable, Global Marine Systems, is plotting a new route that is shorter than any previously taken by a transatlantic cable. As closely as possible, it will follow "the great circle" flight path followed by London-to-New York flights.
"We spent 18 months planning the route," says Mike Saunders, Hibernia Atlantic's vice-president of business development. "If it ever gets beaten for speed we end up giving our customers their money back, basically, so my boss would kill me if we got it wrong."
And, he says, customers from hedge funds, currency dealers and exotic proprietary trading firms are queuing up for the switch-on in 2013.
"That's the way these guys think," Mr Saunders says.
"If one of them is on a faster route, they all have to get on it."