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Wall Street traders fight over milliseconds in mmWave transmission battle

A new cell tower transmitting in millimeter wave (mmWave) spectrum has sparked a disagreement among Wall Street traders looking to shave a few extra milliseconds off their transactions.

Sue Marek

May 11, 2020

4 Min Read
Wall Street traders fight over milliseconds in mmWave transmission battle

The U.S. Securities and Exchange Commission (SEC) is expected to decide later this month whether the New York Stock Exchange's (NYSE) plans to offer a new, high-speed wireless connection is anti-competitive.

The situation highlights the financial value of high-speed, low-latency connections, as well as how seemingly minor technological details – such as the difference between a wired connection and a wireless one, or the distance between a data center and a cell tower – can have significant implications.

At issue is the new 160-foot-tall E-Band millimeter wave (mmWave) cell tower that NYSE's parent company, Intercontinental Exchange Inc. (ICE), built at its data center in Mahwah, New Jersey, where NYSE's electronic trades are executed.

ICE, through its data services division, provides the wireless connectivity between third-party data centers and the Mahwah, NJ, data center. Its new tower transmits in the E-Band, a slice of mmWave spectrum that sits between 71GHz and 86GHz and is ideal for carrying ultra-high capacity traffic a very short distance (typically just one or two miles). Such connections can be even faster than wired, optical networks because sending signals through the air can be faster than sending signals through glass.

An anticompetitive connection?
However, several large investment firms, which also rely on high-speed networks to post bids and conduct trades, told the SEC that the NYSE's plan is unfair because it gives exclusive use of the mmWave tower to ICE. They also questioned the proposed fees that ICE says it will charge them if they want to use the wireless tower.

In a letter to the SEC, McKay Brothers said that because NYSE allowed ICE to build a private tower on the Mahwah data center's premises, it gave the company special treatment. And because the tower is physically closer to the exchange than other public poles that are outside of the Mahwah data center, the ICE tower will have an advantage in terms of latency and will be able to deliver faster trades than any competitors. "Market participants that use the wireless connections to receive selected market data receive a latency advantage in the initial distribution of that data from the Mahwah data center," McKay Brothers argued.

McKay Brothers operates long-haul microwave and hybrid microwave/fiber networks for stock exchanges, and it competes directly with ICE's data services division.

McKay Brothers isn't the only one concerned about the situation. The Securities Industry and Financial Markets Association (SIFMA) also submitted a letter to the SEC noting that the wireless connectivity offered by ICE should be considered part of NYSE because NYSE approved the wireless connectivity and it can't be duplicated or matched by any competitor. In addition, the SIFMA said that NYSE hasn't provided enough evidence that its fees are reasonable.

NYSE, for its part, insists that it is an indirect subsidiary of ICE and that ICE's data services business handles all wireless connectivity between the data centers and it is not controlled by the NYSE. NYSE also said that other investment firms that want a connection between a third-party data center and the Maywah data center can purchase one – ICE plans to charge other firms an initial fee of $10,000 per connection plus a monthly fee of up to $45,000 per month depending upon the bandwidth needed.

Why E-Band matters
Stock exchanges have been using mmWave links in the E-Band to send data back and forth for trading for a number of years. But now that cellular networks are using mmWave for 5G, the E-Band is getting more attention.

According to Emmy Johnson, principal analyst with Skylight Research, which focuses on wireless last mile technologies, these types of specialized E-Band wireless systems that are used by stock exchanges sell for a very high price-tag. "It's not a shared line and is very high speed," Johnson said. "They beat the traditional links by fractions of a second, but when trading, that can mean the difference between getting a great buy/sell or a not so great buy/sell."

Companies like Aviat Networks are working with E-Band spectrum to provide wireless backhaul services for cell sites that need a higher capacity backhaul. Shaun McFall, senior vice president of corporate development at Aviat, said that the E-Band is used when a company needs a high-throughput connection. He said that E-Band mmWave can deliver data the shortest distance the fastest, explaining that it's even faster than optical because traveling through air is faster than glass. However, he noted that it does have some downsides – rain will cause the signal to fade and there are distance limitations.

McFall said Aviat often pairs an E-Band mmWave connection with a microwave circuit for reliability. Traffic that needs high reliability will go over the microwave connection and traffic that needs high speed will use the E-Band.

— Sue Marek, special to Light Reading. Follow her @suemarek.

About the Author(s)

Sue Marek

Special Contributor

Follow Sue on Twitter @suemarek

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