In an effort to increase the transfer speed of stock market information, several stock exchange operators are investigating the use of microwave links to relay data faster than the ability of existing fiber-optic cables. CME Group Inc. and Nasdaq OMX Group Inc. are in the process of exploring a joint venture to relay prices and other market information between New York and Chicago while NYSE Euronext is already offering solutions to the demands for more efficient data transfer between London and Frankfurt.
Though the technology to use microwave radio frequencies to transfer information is decades old, the financial community has begun to utilize it only recently due to concern for potential drawbacks, including signal interference due to inclement weather. Higher-capacity underground cables also provide the ability to transfer a larger amount of information than microwave radio frequencies.
However, the potential issues are outweighed by the desire for faster transmission speeds and the relative inexpensiveness of mounting dishes on exchange’s data centers to transfer signals.
According to Ian Jack, head of global infrastructure for NYSE Euronext’s technology division, “most exchanges are looking into [microwave links] right now.”
He adds that the company is marketing antenna space on the roof of its U.K. data center facility to financial firms looking to secure the fastest possible transmissions from stock and derivatives markets in Germany. The first dish went up at the end of the summer in 2011. Nasdaq and CME have hired a financial consultant to assess traders’ interest in a jointly-managed microwave radio corridor.
Microwave radio is expected to outpace fiber-optics within the next few years as companies continue to plan and develop new microwave networks.
