Microwaves in Trading
Trading firms are enthusiastic about the speeds delivered by microwave technology. Microwave transmission of trading data offers firms decreases in round trip latencies that are impossible to replicate with traditional telecommunications fiber, for the simple reason that air offers less resistance than glass fiber. Estimates are that wireless transmissions can be up to 50 percent faster, which explains why high-frequency trading (HFT) firms are racing to adopt microwaves.
On top of less resistance, microwave technology, which includes microwaves and lesser-known millimeter waves, offers another major advantage over fiber. Whereas fiber-optic cable must adhere to terrestrial rights of way, skilled engineers can implement microwave networks in virtually a straight line (i.e., the shortest distance possible). But microwave technology has its limitations and remains a practical option for only well-capitalized practitioners of HFT, at least at present. A paucity of available channels in established markets, weather interference, capital-intensive infrastructure, and capacity constraints all present obstacles to widespread utilization of microwave transmission for trading. For firms that can overcome these roadblocks, the speed edge that microwaves provide justifies the effort.
Mike Persico of Anova Technologies, a provider of proprietary wireless networks, presents a primer on microwave technology and candidly discusses its strengths ...