Here is the final episode of HFT in the Banana land – or The Case of the Small English Town vs Two Large HFT Towers. No happy end here for the “high-frequency trading”/network providers firms Vigilant Global and New Line Networks who seeked to erect two giant masts in Richborough to improve the Slough-Frankfurt microwave route. Last Thursday the Dover District councilors followed the planning officer’s recommendations and refused both the masts. An interesting moment (sorry for the typos when I was live-tweeting the meeting). It’s important to understand here that the debate about the mast was not about market structure, speed, arm race, the need to save a few microseconds to do arbitrage (or whatever), etc. A comment on Twitter said that “If only SEC and int’l regulators did similar diligence as Dover city council when exchanges want to sell speed” but the meeting in Dover was only about planning applications: the councilors had to decide about the erection of a 2-metre high boundary fence, the installation of a car park charging machine, the erection of a verandah, the formation of a “Juliette-style” balcony, and in the midst of all this, they had to decide about two heavy quasi-identical construction projects in Richborough. I was right to follow the more-than-one-year story of these masts as the most interesting here is the way HFT activities could have had consequences on the daily life of the people (living around the Banana land).
The Chairman (and his group) was at the centre of the scene, whereas the different councilors were around. On the left side you had chairs for the people who wanted to speak “against” an application, and on the right side you had (far less) chairs for those who wanted to speak “in favour”. For each application the DCC allows only one person to speak out against a project, and one person only to speak out for. Each of them had only 3 minutes to provide its views (that’s short). Unsurprisingly, when a person defended the erection of a 2-meter boundary fence, the nearest neighbor asked to speak against the fence. That said, expected when two women had an argument in the right corner of the room, the neighbourhood quarrels were peaceful. Everyone had precise arguments on each applications, and most of the time the councilors followed the officers recommendations. The meeting started at 6:00 pm and half an hour later the council decided to make a short break before discussing the Vigilant and NLN masts. Then the planning officer who was in charge came in the room with two large folders containing all the documents filed by the applicants (the documents I have been reading patiently for a year).
The officer started with the Vigilant mast, which was filed first on January 2016. The room was very quiet, the Vigilant team, the McKay Brothers guy, the New Line Networks guy, me, Bass de Banaan and other neighbors – everybody was silently listening to the officer’s speech.
The DDC officer described the Vigilant application (the banana land area, the need for an optical line-of-sight to transfer data between Slough and Frankfurt, the 322-meter mast, the fact other towers would deviate too far from the direct line between Slough and Frankfurt, etc.) and quickly raised issues about the consequences of such a giant tower. In short, the officer summarized what he wrote in its report: most of the people living there are against the mast; it would be an eyesore in the landscape; the fact a lot of administrations/institutions disagreed with Vigilant’s statements regarding the ecological issues, the impacts on the Roman Fort and on the possible reopening of the Manston airport, the new National Grid project, and so on. The officer also talked about the St Peter church in Sandwich. He didn’t detail but St Peter is a good story: “The Council’s heritage officer has considered in more detail the setting of St Peter’s Church in Sandwich. It is identified that the Dover District Heritage Strategy defines churches as being of outstanding significance, and notes that such buildings have value in their contribution to the aesthetics of the historic landscape and wider rural environment; it states ‘the spires of rural churches can often be seen over long- distances and are recognised and valued local landmarks’.” For a very long time the tallest buildings, in the Western World, were church towers, and they needed a line-of-sight network. The officer: “From the viewing platform of St Peter’s Church, there are far reaching views to the north towards the Church of Saint Mary in Minster. In this view the Proposed Development would draw the eye and detract from the inter-relationship between St Peter’s and Saint Mary.” Here we have a battle between two line-of-sight paths: one between two old churches, the other between two telecommunication towers: “there would be some harm, within the less than substantial range, to the significance of the setting of these churches” wrote the officer. Don’t touch God’s network.
Then the officer went further in his remarks: the fact Vigilant and NLN did not agree on one mast is not a good sign, and all the benefits promised by the applicant “are minor benefits compared to issues involved by such a giant mast”. At this point it didn’t sound good for Vigilant. The officer concluded and the first speaker was invited to talk. As far as I understood, he is a local resident, a retired engineer, and he did a weird 3-minute speech against the Vigilant mast, saying that HFT is “computerized gambling only”, that this kind of activity could harm the market like the subprime crisis did, at some point he cited the Knight Capital debacle in 2012 – and that is ironic: the speaker said such a mast would improve speed and would have bad consequences (a new Knightmare) but he seemed to ignore that the Vigilant competitor here, New Line Networks, is a joint venture between Knight-Getco (known as KCG now) and another trading firm, Jump Trading. Anyway. After that, a Vigilant representative had his 3-minute speech and advocated for the mast (in short: “we have been working on this project for 18 months, we proposed NLN to share but they refused, there is no problem with the Fort, this mast would be temporary [20 years though], we offer a lot of contributions, we choose the area to mitigate the consequences [true], etc.”.
First reaction of the officer: “I don’t change my opinion”. Then a first councilor said: “Seriously, what does that look like?” (i.e. such a mast is ugly), another talked about the major impacts the tower would have on the landscape, another talked about the consequences on the Manston airport, another talked about “layering” and, in short, all the councilors said they don’t get the real local (and national) benefits such a mast could provide to the community. “National benefit is minor, public benefit is more important than private [HFT] benefits” stated the DDC chairman. The ten councilors voted and the hammer dropped: 9 against the mast, and one abstention. Boom. Vigilant had the best case, they worked hard to comply with all the issues raised by the DDC, but it was not enough. End of the story. Harsh.
Then came the New Line Networks mast. I won’t detail as the officer made more or less the same statements. The best part was when he said NLN stated “The tower in Houtem is not enough to achieve a perfect route between Slough and Frankfurt” [at this point I thought: “so, why Jump spent $5,000,000 to buy the Houtem tower if it’s not that perfect?”]. Also (and this is an important legal point), the officer emphasized the fact NLN didn’t properly understand the purposes of an obscure thing named “S106” (Bass de Bannan was 100% right on that) and the legal issues about the Community Interest Company (which would collect the money from NLN before flowing it through the local institutions). What the officer was implying is that NLN didn‘t do a good job (the way NLN filed a last 40-page document two days before the meeting, answering to questions raised over the last several months, proves that).
Then came what was probably the funniest moment of the meeting (at least for the councilors). Guess who asked to speak against the NLN mast? Vigilant of course, and the councilors had a good laugh as the Vigilant representative was now speaking from the left corner (against NLN) whereas he was sitting in the right corner minutes before (advocating for its own mast). In short, the Vigilant representative criticized the NLN mast with (sometimes) the same arguments the DDC officer had against the Vigilant mast minutes before. Weird moment, even if Vigilant had good points. Then the operations director of New Line Networks, who came from Chicago, had his 3-minute speech to defend its mast. I didn’t envy his position: the Vigilant mast was just wickedly refused by the DDC and he was trying to convince that a similar mast in Richborough would be important for the local and London/FinTech communities in a post-Brexit context. Trying to save a few microseconds in 3 minutes, in front of an angry crowd, is hard. Then the DDC chairman said “we refused the Vigilant application for these reasons, we should refuse this one too”, a Labour councilor had ironic words about the fact the two applications were not exactly the same (laughs in the room), the councilors voted and a new hammer dropped: 10 councilors against NLN, and not even one abstention. Zero.
In a way, Vigilant won: they got at least one councilor who didn’t vote against their mast – one point for the better work they did. But overall the “HFT” firms got a slap. Vigilant Global and New Line Networks wanted to erect two giant dicks in the middle of nowhere to save microseconds, and the Dover District Council responded with a “Good bye” (I liked the smile the officer). They just don’t want this thing in their backyard. Landscape versus money. It was too much. Here is the end of the HFT in the banana land spin-off. I assume competitor McKay Brothers (and other HFT firms) are happy. Of course the firms can appeal. I don’t know if they will but with what happened in Dover last Thursday, making appeal for two masts would be indecent and they would certainly get another slap. Vigilant is now walking around Tilmanstone, other are improving their networks elsewhere – latency depends on lots of factors. It’s time to leave Lotus corniculatus alone. After the meeting I ended up in a McDonald’s restaurant (the only one around the DDC offices) with brother McKay and the Vigilant team. They are nice and smart people, I’m sure they’ll find solutions other than putting a 300-meter mast between two churches. Good luck.