Trading at The Speed of Shortwave

Companies say they can move data across oceans milliseconds faster than fiber optics

- Thomas Seal and Justina Lee

High-frequency traders will famously do almost anything to get the latest market data and send their buy and sell orders a few milliseconds ahead of the competition. They blasted through mountains to build the most direct fiber-optic routes possible between exchanges in a competition that transformed global markets and was made famous by Michael Lewis’s book Flash Boys. Soon, pinging light through glass fiber at more than 124,000 miles per second wasn’t fast enough—the glass slows things down—so traders moved on to microwave transmitters that send signals through the air.

But that has problems, too. Microwaves travel only roughly as far as the eye can see before they peter out and need a signal boost. Now two rival market telecommunications companies have signed a pact they say will give traders more access to experimental wireless signals that can travel across oceans.

To do that, signals need a longer wavelength— known as a shortwave rather than microwave—that bounces between the water and atmosphere. It’s an imperfect solution. The waves can handle only a fraction of the data that fiber can, carrying about a kilobit per second vs. gigabits. And some signals can be lost.