Nanosecond profit: US high-frequency trading relies on hollow fiber optic cables


Not all glass fibers are the same. Companies such as OFS Optics, headed by the Japanese parent company Furukawa, are further developing such cables in order to increase the transmission rate and reduce latency. Last year, this resulted in a new generation of hollow fiber optic cables that are already being used in US high-frequency trading. Programmed bots take over the trading of stocks at high speed.

The Wall Street Journal reports on the use of hollow fiber optic cables in the USA. They are used between the exchange’s data centers and communication towers, which forward the data by microwave or laser. Hollow fiber optic cables should be able to transmit several hundred meters before the signal becomes too weak. The basic idea originates from the 1990s, but has not yet been used more widely because of the limited range.

OFS Optics writes about its own hollow fiber, known as “AccuCore hollow-core fiber”, that the latency per kilometer is reduced by 30 percent or 1.54 microseconds compared to conventional fiber optic cables. This corresponds to 0.00000156 seconds. Calculated over several hundred meters, that’s a few hundred nanoseconds.

According to the Wall Street Journal this is obviously a big thing on the US stock exchange, because bots are fed with data faster and the automated buy or sell signals arrive faster.

Hollow fiber optic cables take advantage of the fact that light spreads faster in the air than in glass – OFS Optics specifically speaks of 50 percent. The decreasing signal quality over the air does not yet play a role in the targeted distances.

[Update, 15.12.20, 16:20 Uhr:] Microsecond information corrected.


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