A new story from Marketplace

KCRW
| KCRW

Automatic TRANSCRIPT

Business advantage and the physics of the electromagnetic spectrum and in a way obliges one to wonder about the nature of time the New York Stock Exchange is getting some probably unwanted attention for putting a couple of antennas on the roof of its datacenter antennas that could give companies willing to pay for it faster access to market data how much faster you ask to millions of a second market place's replenish your explains exactly what's going on here what exactly can happen in two millionth of a second everything happens in two million to the second Larry Tabb is founder of tab group a consulting firm focused on infrastructure hello trump tweet sometime and people react and whether it's you know starting a trade war with China resolving a trade war with China but the first person to see that and react you know that reaction can occur to millions of a second after that tweet is launched actually on Wall Street it's not a person's reaction it's in algorithms reaction to something but the point is it doesn't matter if it is to millions of a second or five minutes somebody some computer is gonna be first first to place that buyer sell order first to snag a price before it changes the first on lotus stock before it tanks it's a zero sum game so there's only one first person companies Wall Street firms brokers traders we'll do a locked in pay a lot to be at the front of the line like literally physically at the front of the line they'll get as physically close as possible to where stock trades happen which is why some companies have come here to this grassy median in Mahwah New Jersey people look at the New York Stock Exchange on TV and I think that's where it is on wallstreet it's it's not on Wall Street right it's in my one New Jersey Joseph Losey is with demonstrating mo a new Jersey is where the New York stock exchanges data center is the computers that match up buyers and sellers that's where the trees get done and with the trade get happens increase market data to get that data first traders and market makers paid to put their servers right up in the data center building right across the street from where I am they ran fiber optic cables from those servers under the street to this grassy median and up this poll behind them chain link fence up to microwave antennas that transmit that data out that cost them tens of thousands of dollars a month each all for the chance to be first so the bottom line is it's a speed race and now the New York Stock Exchange has done something to upset that race it has installed its own microwave antennas two of them about the size of basketballs right up on the roof of the data center closer to the computers then the private antennas down the street closer which means they're faster than everybody else to millions of a second faster again just Illuzzi with demonstrating its who can get to the date of the fastest and the New York Stock Exchange as well as all the other major changes figured out we can sell this speech they needed and they have to come to us to get in the century the holding hostage in a complaint letter to the SEC one of the companies on that poll market making firm virtue financial said it was worried that the New York Stock Exchange would charge exorbitant fees for access to the new antennas and that only one company would have the right to use them the real fear is whether that then undercuts competition in the trading process Chester spat is a professor of finance at Carnegie Mellon and former chief economist of the SEC not all stock exchanges do this by the way they don't all cash in on their monopoly power to control speed there's one exchange called I. E. X. for example that actually slows down its data on purpose Runnin Ryan is president of I. E. acts we purposely injected the three hundred fifty microseconds of delay so that we didn't have to play in this arms race that half way I is a hundred and seventy five times longer than this to millions of a second business of the New York Stock Exchange everyone so upset about Ryan says stock exchanges should make money by you know enabling stock trades not selling access to data it's like a referee in the NFL making more money selling sticking gloves to one of the teams that he makes from being paid to referee the game the SEC last year started reviewing fees charged by stock exchanges it wouldn't comment for this story nor would the New York Stock Exchange nor with the firm that complains to the SEC virtue financial in New York I'm sorry but a short for market place there was a note for.

Coming up next