"The small town of Aurora, Illinois – best known for being Wayne‘s hometown in Wayne’s World – has another peculiar appeal to its location: it is one of the closest places that high frequency traders can get to the $63 billion CME Group exchange, where futures and derivatives on commodities and US treasuries trade making it a mecca for HFTs seeking to frontrun slower orderflow. That makes local real-estate extremely coveted, as detailed in a recent Bloomberg follow up to Michael Lewis' "Flash Boys".
The story is familiar to anyone who has been reading this website for the past decade, or leafed through Michael Lewis' HFT thriller: the closer traders can collocate to the CME, the more likely they are to shave off milliseconds from their trades, resulting in frontrunning of slower orderflow that can net them millions. For instance, this small brick hut is owned by New Line Networks a joint venture of HFT giants Jump Trading and Virtu Financial: the two paid $14 million for the land just to be close to the CME Group.
Not happy with the arrangement, Chicago HFT titan DRW Holdings wishes to be even "faster" than Jump and Vitru, and plans to move just a few yards closer to the exchange, having recently put an antenna on a light pole. Next to that is yet another light pole that has been rigged with antennas owned by McKay Brothers, an Oakland-based company. Meanwhile, on nearly all the roads in the area, trading companies have erected antennas or rented space on towers and poles, all of them littered with white circular dishes to try and get closer to the CME data center, all for the purpose of frontrunning slower traders, even if there are still no lasers to be seen, unlike what a visitor to the NYSE in Mahwah, NJ can observe.
As Michael Lewis first hinted in 2014, the real-estate scramble around the exchange had become a turf war between rival HFT corporations until one company decided it was going to do something about the constant jostling back-and-forth between high frequency traders. Dallas-based CyrusOne, which owns the CME center, decided last year that it would finally end the scramble for real-estate by putting up a 350 foot tall wireless tower that would allow anybody to rent space on it. It’s closer than any trading firm could get to the center and targeted putting everybody "on equal footing"... in exchange for a very generous fee to CyrusOne, of course.
And although the tower has room for about 35 satellite dishes but, to this day, remains unused.
Why? Because yet another smaller company, Scientel Solutions LLC, has announced plans to build its own tower about 1000 feet east of CyrusOne's tower, which CyrusOne says would block its own "line of sight" to downstream microwave dishes, and interfere with its communication to and from the CME data center. To prevent this potentially catastrophic development, CyrusOne sued to block Scientel's tower..."
at https://www.zerohedge.com/news/2019-03-09/meanwhile-hft-land-one-microwave-tower-about-be-blocked-another-microwave-tower
No comments:
Post a Comment