Stock market has replaced pits on Wall Street with antennas in New Jersey and Chicago
With the advent of high frequency trading, and exchanges allowing the big banks to front run every trade made on their platforms, the antiquated system of buying and selling in ‘pits’ by live hawkers is long gone and has been replaced by antennas in the fields of New Jersey and Illinois that stand as monoliths to the greed of Wall Street.
Today’s Wall Street trading platforms
Banks and major brokers pay millions of dollars to be nearest to the servers that facilitate the majority of trades at the NYSE and CME today so that they can not only see each and every particular trade that comes into the markets, but front run them with billions of trades per second which is used to siphon off pennies that over time turn into millions if not billions of dollars.
Readers are familiar with the various microwave and laser arrays located at the real New York Stock Exchange in Mahwah, New Jersey, both of which we have written about in the past.
This article, however, is not about the familiar antennas off Route 17 in New Jersey. Instead, demonstrating to what lengths the high frequency traders will go for just a few millisecond advantage – which in the HFT world makes all the difference between billions in profits and losses – Bloomberg reports that a mysterious antenna has emerged in an empty field in Aurora, near Chicago, and a trading fortune depends on it.
Strange? Of course: as BBG’s Brian Louis admits “it was an odd transaction from the outset: $14 million, double the going rate, for a 31-acre plot of flat, undeveloped land just west of Chicago. In the nine months since, the curious use of the space has only added to the intrigue. A single, nondescript pole with two antennas was erected by a row of shrubs. Some supporting equipment was rolled in. Thatâ€™s it.”
As it turns out, those antennas – as readers may imagine – were anything but ordinary. Same goes for the buyer of the property: anything but your typical land investor, although the name will be all too familiar to those who have followed our reporting on HFT over the years: it was Jump Trading LLC, “a legendary and secretive trading firm thatâ€™s a major player in some of the most important financial markets.” – Zerohedge
It is estimated that high frequency trading algorithms now make up over 75% of all trades put onto the nation’s stock markets, and have been the catalyst for banks like Goldman Sachs to report zero losses in a quarter despite making billions of trades from their firm.
As nearly everything moves onto the ‘internet of things’, the days of manual or even anything requiring human interaction is quickly going the way of the dodo bird. Â But what remains the same is the fact that if you are a big money player in the realms of Wall Street, you will always have an advantage over the average retail investor, and where size is now measured not on how big your wallet is, but how big your antenna is.
Kenneth Schortgen JrÂ isÂ a writer for The Daily Economist, Secretsofthefed.com,Â Roguemoney.net, and Viral Liberty, and hostsÂ the popular youtube podcast on Mondays, Wednesdays and Fridays.Â Ken can alsoÂ be heard Wednesday afternoons giving an weekly economic report on theÂ Angel Clark radio show.