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Light Speed Now a Bottleneck in Fastest Networks

By InfoWorld

December 9, 2010



High-frequency trading firms should consider where they locate their data centers, according to researchers studying light propagation delays in fiber-optic based networks. Data shuttled around the world at the speed of light is momentarily slowed by routing and switching, as well as the vast geographic distances it has to travel, but positioning an intermediate node has the potential to limit light-speed delays. For example, it takes about 50 milliseconds to send a message from New York to London, but placing a server in between the two would cut that time in half, says the MIT Media Laboratory's Alexander Wissner-Gross. That may be enough time for high-frequency trading firms to take advantage of some momentary pricing discrepancy.

Wissner-Gross and University of Hawaii researcher Cameron Freer have developed a general formula for determining the best location to sit in between multiple sources of information, and have triangulated the best locations in the world for locating servers for performing high-frequency trading across 52 exchanges worldwide. The research could lead to new data center hotspots around the globe, and has implications for other organizations involved in complicated time-sensitive global interactions.

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