Trading before the trader

I chaired TradeTech Architecture  last week, and the conversation was all about HFT and low latency.

For those not in the know, that’s High Frequency Trading, using a technology called low latency that enables ultra-high speed trading in real-time.

What’s ultra-high speed?

Well, I asked one panellist how fast you could process a trade around the world.

I’ve asked this before and technically it would be about 400 milliseconds or less.

If you’re wondering how fast that is, here’s a chart of speeds:

1.0 = a second [ s ]

0.01 [ hundredth ] = a centisecond [ cs ]

0.001 [ thousandth ] = a millisecond [ ms ]

0.000 001 [ millionth ] = a microsecond [ µs ]

0.000 000 001 [ billionth ] = a nanosecond [ ns ]

0.000 000 000 001 [ trillionth ] = a picosecond [ ps ]

0.000 000 000 000 001 = a femtosecond [ fs ]

0.000 000 000 000 000 001 = a attosecond [ as ]

0.000 000 000 000 000 000 001 = a zeptosecond [ zs ]

0.000 000 000 000 000 000 000 001 = a yoctosecond [ ys ]

In fact, we had a lot of discussion during the conference about even faster speeds, with one wag asked if orders could be filled before they are sent based upon neutrinos.

You may already know about neutrino’s but, if not, it was the big news of a week or so again when scientists working on the  Large Hadron Collider experiment found the atom, called a neutrino, can travel faster than the speed of light.

It’s a ground breaking piece of news as it means that basic science is turned on its head when something can arrive before it leaves.

Here’s a good summary of what the scientists found:

“Neutrinos fired 454 miles from a supercollider outside Geneva to an underground laboratory in Gran Sasso,Italy, took less time (60 nanoseconds less) than light to get there. Or so the physicists think. Or so they measured. Or so they have concluded after checking for every possible artifact and experimental error.  The implications of such a discovery are so mind-boggling, however, that these same scientists immediately requested that other labs around the world try to replicate the experiment. Something must have been wrong to account for a result that, if we know anything about the universe, is impossible.  And that's the problem. It has to be impossible because, if not, everything we know about the universe is wrong.”

Everything is wrong, because it does mean that time travel is possible as atoms are arriving before they are sent, according to the speed they are travelling which is faster than light?

Could such technology be applied to trading? was the big question last week.

There are already predictions that some exchanges can process orders in under a nanosecond.

That’s fast.

Can they get much faster and what does it mean?

This was the big chat of last week, which I’ll cover in more depth in my next blog entry.

Meantime, here’s my favourite quote of the week:

A bartender says: "I’m sorry, we don't serve neutrinos here".

A neutrino walks into a bar.