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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: ftth who wrote (36275)	10/16/2010 1:46:14 PM
From: Frank A. Coluccio	Read Replies (4) \| Respond to of 46821

Hi ftth. I ran the numbers with Petere a while back relating to the fiber vs. RF comparison you discussed in #msg-26892539 in response to my #msg-26892466 and the outcome (not including the other variables you mentioned, and which I expand on below) was pretty much the same. Thanks. If you'll permit, some Saturday musings on this subject follow, although I would advise anyone reading this that you enter at your own risk, ergo, caveat lector. There are some logistic and situational differences that one might want to consider. One basic hurdle to overcome is the notion of a linear type trading model that one historically associated with a trader sitting behind a desk and the IT systems he or she would normally access to execute trades, or the modality that non-HFT traders still employ. Currently, for advantage, the distance in question used in the HFT model isn't only that between the trading entities desk (which might be situated on Park Ave. in NY City or might be in Plano, TX) and the exchange, but more importantly, between the collocation center that houses the trader's servers and the exchanges. One interesting contemplation is that, if microwave links were used instead of fiber, then perhaps the collocation center would be redundant for the purposes of the NY trader, but it would still be highly desirable to the trading entity in Plano. In the NY instance, the microwave link would have to be between the trading entity and a collocation center, anyway, since for all intents and purposes that is usually the pickup point required, or it might also occur at the ticker plant itself if agreements were put in place to support it. As one begins to see early in this discussion, there is no divine order being sought, since it's still an evolving, catch-as-catch-can venue ripe for innovating new techniques, despite however the exchanges and regulators try to portray it. The old adage about rules being made to be broken comes to mind here. If microwave were used between the collocation center and the ticker, then there would have to be a high number of antennas erected atop the colo, or a condominium feed to carry all of them, which would then introducing an additional queuing factor, which would defeat any advantages that individual traders might seek to achieve on their own. Run the permutations on this and then try to envisage a consensus approach being adopted by the exchange. You get the picture. Secondly, some trading entities have taken the matter to extremes by attempting to eliminate all manner of electronics along the path, to the greatest degree possible, between their servers and the ticker and/or between their offices and the collocation center. You see how the variables interact here. Some are seeking direct optical paths entirely. However, the processing latency they are trying to avoid here would nevertheless be borne by the wireless approach, simply due to the nature of how modulation onto an RF carrier takes place and the pre- and post- stages of radio terminals and their connecting local area networks, each adding additional latency. LAN backbone/aggregation/distribution/access switches within the trading entity's building, too, factor into the overall result, and these additional factors would also apply to fiber paths to the degree that they could not be mitigated with all-optical construction. To circumvent the latter for the wireless approach, an RF over fiber approach would be required, effectively making the fiber-to-the-roof segment act like an optical form of RF waveguide, which today is eminently doable at a much reduced latency cost. Those are enough musings on the subject for one Saturday sitting. Thoughts? FAC ------