A Russian spy agency? The CIA? NO, Jump Trading. When you drive through farm land anywhere out in the Midwest and you see big antennas sitting out lonely in a field it usually means there is a missile silo under it, BUT a trading firm doing WHAT? Gaining an edge, that’s what. Seems this antenna is right across the street from the CME Group’s data center and servers and Jump Trading is gaining something like one-millionth of a second in execution speed. Wow, HFT hits the futures markets. Oh Jump, if you are so secretive how come we all know about this?
“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. That’s it.
But those aren’t ordinary antennas. And the buyer of the property isn’t your typical land investor. It’s an affiliate of a company called Jump Trading LLC, a legendary and secretive trading firm that’s a major player in some of the most important financial markets. Just across the street, it turns out, lies the data center for CME Group Inc., the world’s biggest futures exchange. By placing its antennas so close to CME’s servers, Jump may be trying to shave maybe a microsecond — one-millionth of a second — off its reaction time, potentially enough to separate a winning from a losing bid in trading that takes place at almost the speed of light.
It’s the latest, and perhaps boldest, salvo in an escalating war that’s being waged to stay competitive in the high-speed trading business. The war is one of proximity — to see who can get data in and out of CME the quickest. A company called McKay Brothers LLC recently won approval to build the tallest microwave tower in the area while another, Webline Holdings LLC, has installed microwave dishes on a utility pole just outside the data center.
“It tells you how valuable being just a little bit faster is,” said Michael Goldstein, a finance professor at Babson College in Babson Park, Massachusetts. “People say seconds matter. This is microseconds matter.”…