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High-frequency traders pay attention to satellites to increase ultimate speed



In the relentless pursuit of speeding up stock trading, space may be the last frontier.

Today, high-frequency traders use microwaves, lasers and advanced fiber optic cables to reduce the time required to execute transactions by a fraction of a second. This is a business that relies heavily on the ability to transfer data between financial centers as quickly as possible. Price movements in key markets lead to fluctuations in other markets. HFT companies must compete from one exchange to another to adjust their trading activities based on the latest data. Otherwise, they risk losing money to faster HFT companies with new information.

A network of satellites orbiting the earth’s surface for hundreds of miles may represent the next technological leap. Starlink, deployed by Elon Musk̵

7;s Space Exploration Technologies Corp., has launched more than 1,000 satellites. Amazon.com Inc., OneWeb Global Ltd. and Telesat Canada are building networks of competitors, which will be put into use in the next few years. A British space entrepreneur is planning to build a network to cater to the needs of the high-frequency trading crowd.

Satellites in such a constellation will orbit closer to the earth than older generation telecommunications satellites. They are also smaller and cheaper. In this way, you can deploy a network of hundreds or thousands of satellites, no matter where you are on the earth, at least one satellite is always nearby, even if the satellite is flying at thousands of miles per hour. More advanced projects plan to use laser links between satellites to create a fast data network covering the world. With such a network, Chicago traders can send US futures prices to satellite spending, which will forward them to London through a chain of several satellites, and then down to London. Such space-based connections may be faster than existing networks on earth.

This may change the way high-frequency traders send data between exchanges in North America, Europe and Asia.


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