Wall Street gains an edge by trading over microwaves


McKay Brothers, a firm that sells high capacity links to trading firms, is connecting the financial districts of New York City and Chicago with a new network that aims to execute the fastest trades in the country. This new network, however, won’t be built on private fiber lines. Instead, McKay is taking to the airwaves, building a chain of tower-mounted microwave radios between the Big Apple and the Windy City.

Why is microwave faster? Electromagnetic waves travel at different speeds depending on the materials they traverse, said Gary Croke, director of product marketing for Aviat Networks(s avnw), the vendor McKay selected to supply its Eclipse Packet Node radios. Optical fiber has a much higher refraction index than plain old air, thus slowing down light waves moving through it, Croke said in an e-mail interview. By sending microwaves over the air, McKay is able to cut down the round-journey of a packet by 4 milliseconds, Croke claimed.

That may not sound like much, but according to McKay and Aviat, those 4 millionths thousandths of a second can make all the difference in the world to a high-frequency trader. Executing a trade even the tiniest fraction of a second earlier than a competitor can lock in the smallest change in pricing, which, when applied over massive volumes of shares or commodities, can translate into millions dollars. Aviat estimated said that a single millisecond advantage could equate to an additional $100 million a year to large high-frequency trading firm.

McKay isn’t revealing the exact route or number of towers of radios used in the network, which is scheduled for completion this summer, though it is sure to use as few links as possible. The more times a transmission passes from radio waves to electronic components the more it’s slowed down. Fiber transmissions have the same limitations, passing through routers and repeaters many times along their journey. McKay wants to ensure its not only using the fastest medium for transport but also that it has the fewest hops.

Fiber also has to move burrow under streets and wind around obstacles, lengthening the overall distance over which signals must travel. Meanwhile, microwave, in most cases, can take the most direct path as transmitters must only be within each other’s line of sight. The only fiber components in McKay’s network will be in the end cities itself, completing the final mile link between the end-point transmission towers and McKay’s financial firm customers.


Abraham Paul

The criteria in deciding the type of media and transport depends on not only speed of transaction but also many other crucial issues such redundancy in network, reliability and serviceability during adverse weather conditions, exposure to natural and human made calamities and over and above the proximity of various systems and networks in the given space to restrict interference. Microwave links are fine in case of point to point connectivity systems such as between stock exchange to the network provider. Here also a sensible approach shall be a standby route using OF link. The common problem we find as in Mr. Gary’s suggestions is that when things are looked in isolation it seems fine but in conjunction of a large number of such systems in a small footage things get complicated. And that is the curse of planning high data rate mobility systems that has small cell coverage and connectivity of large number of cells each using discrete frequencies via short haul Microwave links become almost impossible. Here is the advantage of OF links as backbone and wireless for the last mile or shorter end links that could be made fail proof by number of standby systems and alternate routing methods. About Mr. Garys argument of speed loss due to latency in OF transport, I would say it is a non-issue as far as the it can offer real time transactions. Then the question is what is considered real time. The yard stick of real time in such cases can be taken as speed at which the Cinema film frames move which is only in terms of few milliseconds which would be quite fine for a stoke broken management transactions.


Wow, microwave links aren’t terribly reliable…ever see a live TV remote go down? Even fixed microwave links are subject to significant interference.


A millisecond is one thousandth of a second.
One millionth of a second is called a microsecond.
Which did you mean to use in the article?

Kevin Fitchard

Hi Jerry, I meant millisecond. Typo on my part. Thanks for pointing that out.

Kevin Fitchard

Hey Peter,

How are you? Sorry, didn’t get that info. Had to pull this one together from a quick e-mail interview.


Thanks to WolframAlpha, the answer is that to travel 719.5 miles from New York to Chicago at the speed of light would take approximately 4 ms (milliseconds). (Round trip appx 8 ms) Obviously the precise paths(including media characteristics)/transitions would have to be known to calculate the exact answer.

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