Friday, September 16, 2011
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."
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."
Tim Geithner With Jim 'Short The Financials' Cramer On Euro Crisis, Obama's Failure (CNBC Video)
(CNBC Video)
Interview posted this morning on Comcast Bubblevision.
CNBC
Speaking during the "Delivering Alpha" conference - organized by CNBC and Institutional Investor - Geithner said the U.S. recovery is slower than many would like and that's not being helped by chaos in Washington.
"You have this terribly damaging political dysfunction here and in Europe that leaves the world wondering whether the political system has the capacity to do the right thing," he said. "That is very damaging to confidence."
However, he expressed confidence in Europe's ability to get out of its massive debt crisis, which has roiled global markets on fears that a collapse in a nation such as Greece will lead to another global financial meltdown. He said there is "not a chance" that Europe will have an event comparable to the implosion of Lehman Brothers in September 2009.
Geithner headlines today, courtesy of Bloomberg:
- GEITHNER SAYS EUROPE IN THREE YEARS WILL BE `ABSOLUTELY ALIVE
- GEITHNER: GROWTH WILL BE WEAKER WITHOUT OBAMA JOBS PLAN
- GEITHNER SAYS OBAMA PLAN WILL MAKE U.S. ECONOMY STRONGER
- GEITHNER SAYS `OVERHWELMING FORCE' NEEDED TO SOLVE ECO CRISIS
- GEITHNER SAYS `WE HAVE WEAKER GROWTH THAN WE THOUGHT' IN U.S.
- GEITHNER SEES POLITICAL DYSFUNCTION IN U.S., EUROPE
- GEITHNER SAYS U.S. HAS `HUGE INTEREST' IN EUROPE RECOVERY
- GEITHNER SAYS EUROPE HAS TERRIBLE GROWTH PROBLEM
- GEITHNER SAYS EUROPE `GOING TO HAVE TO DO MORE'
- GEITHNER SAYS EUROPE HAS TRADITION OF `INDULGENCE'
- GEITHNER SAYS U.S. FINANCIAL SYSTEM STRONGER
- GEITHNER SAYS U.S. HAS `BIG INTEREST' IN HELPING EUROPE
- GEITHNER SAYS OBAMA JOBS PLAN `ABSOLUTELY' NOT DEAD ON ARRIVAL
- GEITHNER URGES `MODEST CHANGES' IN TAX BENEFITS
- GEITHNER URGES AVOIDING OBSTACLES TO HEDGING RISK
- GEITHNER SAYS REPATRIATING PROFITS PART OF CORPORATE TAX REFORM
- GEITHNER SAYS GREECE MUST BE SUPPORTED WITH MONEY
Recently on Cramer:
Cramer Gets Bearish - 'Short Financials NOW, European Lehman Moment Is Upon Us'
House 'disapproves' US debt ceiling increase
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| The House of Representatives passed a resolution symbolically rejecting an increase in the US national debt © AFP/File Nicholas Kamm |
WASHINGTON (AFP) - The Republican-controlled House of Representatives on Wednesday passed a resolution symbolically rejecting an increase in the US national debt.
By a 232-186 vote, the House passed the measure stating that it "disapproves of the president's exercise of authority to increase the debt limit."
The vote however has no real effect, because the Democratic-controlled Senate rejected a similar measure last week.
Following bitter mid-year budget negotiations that brought the United States to the verge of defaulting on payments, both parties in Congress agreed on July 31 to immediately increase the debt by $400 billion, then increase it by a further $500 billion in September unless the House and the Senate both passed measures opposing the move.
"Borrowing even more before we can enact significant spending cuts to begin dealing with the root problem is a foolish errand," said Republican Representative Tom Reed.
Democrat Charles Rangel voted against the measure.
"To go against the president's ability to maintain the integrity of the United States of America I think it is just so wrong," said Rangel.
Democrats saw the vote as a chance for Republicans to symbolically show their supporters that they remain strongly against debt increases.
Separately, a congressional "SuperCommittee" has been tasked with finding ways to reduce debt by at least $1.2 trillion over 10 years and presenting its findings in November.
© AFP -- Published at Activist Post with license
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