In the relentless pursuit of accelerating stock trading, space can be the last frontier.
Today, high-frequency retailers use microwaves, lasers, and advanced types of optical cables to shave a fraction of a second of the time it takes to make trades. This is a business that depends to a large extent on the ability to transfer data between financial centers as quickly as possible. Price movements in key markets cause fluctuations in other markets and HFT companies have to compete from one exchange to another to adjust their trading activity in the light of the latest data. Otherwise, they risk losing money to faster HFT companies with more up-to-date information.
Satellite networks orbiting several hundred miles above the earth’s surface could be the next technological leap forward. Starlink, implemented by Space Exploration Technologies Corp. Elon Musk has already launched more than 1
Satellites in such constellations would orbit the Earth far closer than older generations of telecommunications satellites. They are also smaller and cheaper to run. This makes it possible to deploy networks of hundreds or thousands of satellites in which at least one satellite is always nearby, no matter where you are on the planet, even when satellites are twisting at thousands of miles per hour. More advanced projects plan to use laser links between satellites to create fast data networks covering the world. With such a network, a trader in Chicago could redirect US futures prices to a satellite that would transmit them in a chain of several satellites and then reach London. Such space-based connections can be faster than existing networks on Earth.
This has the potential to change the way high-frequency traders send data between exchanges in North America, Europe and Asia.