April 9 Update: Read my new article: How HFT firms access secure government briefings to get the jump on market-moving data
You’re here because you googled FCC license 1215095, right? Perhaps you’ve already discovered the registrant, Converge Towers LLC, and its corporate ties to Cantor Fitzgerald, a New York financial firm best known for the devastation it suffered in the 9/11 attacks.
Or maybe that information is incorrect. (See the comments.) In my work, I discover quite a lot of errors and outdated information in internet databases. I haven’t actually called the FCC to check so for now, I can’t actually confirm anything about 1215095.
I think I might, however, know the story — or at least part of the story — Michael Lewis hints at at the end of his fascinating new book, Flash Boys: A Wall Street Revolt.
That’s because a couple of months ago I wrote a post about how Vigilant Global — a Montreal-based HFT prop shop was building its own microwave networks.
I later learned this was something of a trend so I wasn’t surprised, but rather perplexed, by the final paragraph of Michael Lewis’ fascinating new book, Flash Boys, where he writes about a microwave tower he discovers in the wilds of Pennsylvania:
The application to use the tower to send a microwave signal had been filed in July 2012, and it had been filed by … well, it isn’t possible to keep any of this secret anymore. A day’s journey in cyberspace would lead anyone who wished to know it into another incredible but true Wall Street story of hypocrisy and secrecy and the endless quest by human beings to gain a certain edge in an uncertain world. All that one needed to discover the truth about the tower was the desire to know it.
Any inside information I have about this situation comes mostly from the anonymous correspondents who have gotten in touch with me over the years due to my coverage of HFT. I have written about it from a completely different perspective than Michael Lewis, and I can’t help but wonder if the hint at the end of Flash Boys is pointing to this other HFT story.
For the record then, here’s what one of my anonymous sources told me about HFT firms’ microwave networks:
Vigilant (which is now owned by DRW) had the fastest microwave line from Chicago to NJ … They shopped themselves around and Tower just, and now regrettably, missed out. DRW needed better technology which is why they bought (Vigilant) — not because it was making a lot of money, in which case they wouldn’t have been for sale.
According to this anonymous source, there are also microwave networks between Chicago and Washington, D.C., where economic news and indicators, are regularly announced by government agencies. To get their hands on this information as quickly as possible, several HFT shops even set up not just their own private microwave networks but also their own “news agencies.” Vigilant Global, for example, funded the now defunct Canadian Economic Press or CEP News. And the Wall Street Journal had a front page story last summer on the connections between Need to Know News, its owner Deutsche Börse, and various Chicago HFT traders.
According to my anonymous source, “The firm that has probably made more money from DC news services than anyone else is Virtu (formerly Madison Taylor and EWT),” which is now in the process of going public.
“I *think* Virtu was/is a NTKN client,” wrote my source in an e-mail. They were the early adopters on the EIA numbers (oil and nat gas inventories) and less so on the macro economic data. They also put these strategies on FPGA cards to bypass the OS which shaved microseconds of reaction time. The telco is only one part of the latency and if all HFT clients get it at the same time the one who processes it first wins.”
HFT-related microwave operations are also under way in Europe too where my source says that Jump is rumoured to have bought a de-commisioned NATO telco tower in Belgium to secure the fastest London to Frankfurt route. He also said:
London-Frankfurt has three commercial providers (that I know of): Colt, Perseus, Fixnetix. CIC was recently trying to sell various assets that they’d put together. In Europe, the regulatory structure for link licensing is byzantine, and you have to deal with UK/Ofcom, France/Belgium, and Germany. I suspect that several household-name HFTs are already running their own routes. (Jump, Virtu, and Final probably. Tower isn’t there yet but will be. Allston and Getco are doubtful) Not sure about the UK coast where the trans-atlantic cable terminates to London or London to Stockholm which all will be done if it isn’t already.
I can’t say that this is all clear to me, but for those of you that follow HFT and microwave networks maybe you’ll find something of interest here. If you do, I’d love to know about it. Please contact me at firstname.lastname@example.org.
Oh, and if you want more on the telco aspect of all this, this Chicago Tribune article is detailed and interesting. Finally, here’s something I wrote on HFT and lock-ups.