Shortwave Trading | Part I | The West Chicago Tower Mystery

Since 2014 this blog has extensively covered the wireless networks built by high-frequency trading (HFT) firms or network providers to reduce latencies between the different exchanges around the world (market makers need fast connectivity to manage risk, news traders also need to be fast, etc.). This epic investigation on microwave, which started with HFT in my backyard, will be fully reported in a book I’m currently writing (in French for now). As I’m quite busy with this writing (and other/more interesting matters about market structure), I didn’t really have the time to check out what I have been hearing about “shortwave” or “high frequency” radio. This is the way high-frequency trading firms may use shortwave radio to directly connect widely-separated locations (in short, traders are willing to use shortwave to cross oceans with less latency than any fiber – like Hibernia).
But recently I got more intel about the situation (and some fun anecdotes). With some help from the US, I found that a firm purchased a field for more than 1$M to build towers and antennas; with some help from the EU, I got hints about Germany; and I dug into UK public records.
I even met, last March in Amsterdam, people involved in those projects. Not surprisingly, at least five HFT/market making firms showed up behind the shell companies/names they use to hide. The usual suspects. Above all, I have been contacted recently by someone from Chicago, Bob, who decided to investigate the “shortwave” networks in his backyard. Today I’m pleased to host Bob as a new guest writer on this blog. This first part of the “Shortwave Trading” series is released at the same time Bob is talking about what he found at the STAC Summit in Chicago. Next parts will follow soon.

I’m Bob Van Valzah and I’m on a “gardening leave” between jobs working as a Performance Engineer for high-frequency trading firms in Chicago. I recently stumbled onto the first evidence of shortwave trading at a site in West Chicago, Illinois and then used Federal Communications Commission (FCC) database research techniques pioneered by the owner of this blog to find two more sites. My non-disclosure agreements with employers would typically prevent me from talking about this, but my trading-related discoveries are my own while on gardening leave. The results of my research may be of interest here and there, so I offered to do some guest posting on this blog. I’ll have to go quiet again in July when I head back to work.

It might be reasonable to assume that “West Chicago” was just a western part of Chicago, Illinois. In fact, it’s a city in its own right, twenty some miles west of the big city. A typical weekend will find me cycling down a bike path that runs nearby. In March, muddy path conditions caused me to detour through an industrial park in West Chicago where the West Chicago Tower Mystery began. I looked up from the handlebars and saw this tower.


Mysterious West Chicago Tower, March 10, 2018.

I’m an amateur radio operator, or “ham,” (KE9YQ) and those four big antennas look a lot like ones that a ham would use to talk across an ocean. I’ll just call them shortwave antennas here, but practitioners of aluminum feng shui (antenna design) will recognize them as log periodic. There’s also a microwave dish antenna between the top two shortwave antennas. This much I could tell just by looking.

Most of the radio towers you see each day are cell towers. There are 215,000 of them in the US. They differ from other radio towers in that they will almost always have one or more triangular structures with three or more directional antennas on each side of the triangle. A grid of cell towers covers an area with roughly hexagonal cells so that you get a good signal everywhere.

The West Chicago tower had no triangular structure, so I was pretty sure it wasn’t a cell tower. And these antennas were huge compared to regular cell tower antennas. I could literally see them 1/2 mile away. Some cell towers do have microwave dish antennas when it’s hard to bring fiber to a site, but shortwave antennas didn’t seem to go together with microwave in my mind.

Mystery #1: If this wasn’t a cell tower, what was it?

With my curiosity up, I pedaled to the base of the tower and took a look around. Like all cell towers, there’s a barbed wire perimeter fence and I could see a power meter where electricity enters the site. The panel allowed for up to four power meters because it’s common for two or more carriers to share a single site. There’s also a master power switch for each carrier so that they can shut off their juice for maintenance without knocking the other carriers off the air.


The tower base and perimeter fence.


The only power meter for the site.

I walked right up to the fence and zoomed in on the power meter. It said “U.S. Cellular.” They are indeed a regional cellular carrier, but they only serve 23 U.S. states and wouldn’t want their signals crossing any oceans.

Mystery #2: Why would a regional cellular carrier pay for power to cross oceans?
Riding on a hot day, I may stop for a drink in the shade of a cell tower, so I’ve seen what a lot of cell sites look like. There’s often a small building inside the perimeter fence to hold the equipment that runs the cell site. The ground inside the perimeter fence is typically coarsely crushed rock to prevent weeds from growing.

An odd thing about this “cell site” was that it had a garbage pile inside the fence. Cell sites are unmanned and don’t need much maintenance. Crews who do work there typically leave the site clean and take their garbage with them. There is no trash pickup at sites like this, so it seemed odd that there’d be cans full of lunch wrappers and cardboard boxes. If this was a cell site, it was maintained by much sloppier crews than the ones I’d typically seen.

One box in the garbage pile caught my eye so I zoomed in through the fence and got the best shot of the label I could with my iPhone. I had never heard of the company Ettus Research or the USRP X300 device. With all the cell sites in the world, you’d think they’d be made from off-the-shelf parts, not stuff cooked up in a research and development lab.


The label on an interesting box in the garbage pile.

Mystery #3: Why would a cell site need equipment from a research company?
Most any cell site with a tower will have a sign with a seven-digit number known as the FCC Antenna Structure Registration (ASR) number. If you were a cellular carrier out shopping for a good place to put your antennas, you could use this number to find the height of the tower and get other useful nuggets from the FCC database. I took a picture of the number since I thought it might come in handy when I got home.


U.S. Cellular sold the tower in 2014.

Back home, I pulled up the FCC ASR database and found that the tower was indeed built by U.S. Cellular in 2009. Digging deeper, I also found a record that they had sold it in late 2014. This sort of transaction is pretty common in the business. As subscribers come and go, cellular carriers have to move their cell sites and keep adjusting their antenna heights to maintain good coverage everywhere.

Google Street View is a wonderful tool for looking at the way the world used to be. I found a view of the tower from August 2012 when it had already been picked clean of all cellular antennas (they have resale value!), with only the tell-tale triangular mounting structure remaining at the top of the tower.

West Chicago Tower 8:2012

The tower as it looked in August 2012.

So part of the history was becoming clear. The tower was built by U.S. Cellular in 2009, but fell into disuse sometime before 2012. It was eventually sold in late 2014.

As is common with cell sites these days, the tower site was sold to Vertical Bridge, an antenna site management company. Instead of owning antenna sites themselves, it now seems common for carriers to just lease space on towers at antenna sites owned by management companies. So that’s no real clue about current ownership or usage of the tower.

Mystery #4: Where is the other end of that microwave link?
Microwave links require a license for operation, so I returned to the FCC databases and looked for licenses associated with that tower. Each license gives the GPS coordinates of both ends of the link and the FCC has a helpful mapping function. It showed a direct link between the West Chicago tower and another tower right by the Chicago Mercantile Exchange! It was still just circumstantial evidence, but this was the first good clue that the West Chicago tower had something to do with trading. It was looking less and less like spooks were using the tower.


FCC map of microwave connection between CME and West Chicago tower.

EttusResearchUSRP X300

Top-of-the-line software defined radio.

Mystery #5: What was in that box in the garbage pile?
Google helpfully explains that Ettus Research is the leading provider of Software Defined Radios (SDR). These are the devices you need to make any kind of custom radio you want. Just change the software and you can send voice, pictures, video, or trading information. The particular model in the box is their top-of-the line, with an FPGA, two 10 gigabit Ethernet ports, and a PCIe bus interface. The pair that was in that box cost nearly $10,000. You don’t need gear like this at a cell site.

Mystery #6: What could be interesting across an ocean?
I’m much better with the technology of trading rather than understanding how to make money with trading. But it seemed like a reasonable guess that prices on the markets at CME would be correlated with activity in European markets – let’s say, in Slough (UK) and Frankfurt (Germany). So I fired up Google Earth and plotted the lines that a radio signal would have to travel between West Chicago and the markets in London and Frankfurt.


Shortest paths between West Chicago and European markets.

We are so used to seeing flattened projections of earth that it’s easy for a Chicagoan to think of Europe as being east of Chicago. But in fact the shortest way to Europe is northeast, at about a 45º angle.


For radio, Europe is northeast of Chicago.

This angle is important because those shortwave antennas on the tower are directional. If you know you want to talk to Europe, why send any of your signal toward Guam? Directional shortwave antennas focus your signal in the direction of the pointy end of the antenna. In the photo of the tower above, I’m standing right under the path where the top antenna is pointing.

At shortwave frequencies, it’s difficult to make antennas with a narrow beam width. London and Frankfurt are only about 5º apart when you’re aiming from Chicago, so one antenna should hit both cities. This raises the question of why the tower needed four shortwave antennas, all pointed in pretty much the same direction.

Some of the antennas on the tower focused their signal well, producing a more powerful signal, but only operate over a narrow range of shortwave frequencies. Others operate over a wide range of frequencies, but can’t produce a strong signal.


The lower two antennas have been removed from the tower.

It also appeared that the second shortwave antenna up from the bottom had been damaged in a wind storm or perhaps poorly installed because four of its five elements had been knocked significantly out of the horizontal plane. Nonetheless, I was surprised when I visited site a few weeks later and found that the lower two antennas had been removed. So this site is being actively developed in the spring of 2018. They’re moving antennas around and they haven’t gotten rid of the garbage pile, so there’s still work to do.

Bringing it all together, I’ve discovered that this West Chicago tower has all the ingredients needed to make a low-latency transatlantic market connection. I’ve also found two other sites around Chicago with massive shortwave antennas pointed at Europe and microwave links to CME, so there’s more than one horse in this race. I’ll document these sites in a coming post. Licenses also exist on the east coast. I’ll be looking for them on trip in mid-June. FCC searches have also turned up licenses in Anchorage, Alaska which is on the path from CME to Tokyo [Sniper’s note: that reminds me I didn’t check recently what is going on around Go West]. Spotters are already at work looking for antennas around London and Frankfurt.

Somewhere around Slough (UK), March 2018

Shortwave is no panacea. It’s unreliable, expensive, and very low bandwidth. Think dialup speeds. But you can’t beat it for latency. I plan to go into more detail on shortwave tradeoffs in a future post. You might be wondering if anybody can receive their signal, perhaps with the possibility of getting an order to market faster. Yes, anybody can receive it, but the sender would be foolish not to encrypt it in a way that can’t be cracked. This is easily done without impacting performance.

A muddy bike path diverted me from my usual route and I happened upon the tower. Being a ham, I recognized the shortwave antennas. I could see the potential, having worked in trading. I’m on gardening leave so I can talk publicly about what I found related to trading – I’ve just assembled the public records, photos, maps, background info, and sprinkled in my analysis, with some inspiration from the way this blog investigated the microwave networks. The next post from me will describe the differences between microwave, shortwave, fiber, and satellite. Stay tuned.

Somewhere in Kane County (US), April 8th, 2018


  1. This stuff isn’t even all that secretive. There are probably at least 10 companies that were formed in the last five years or so that simply built microwave link relays from CME to NYSE. A ton of your assumptions are wrong, I was heavily involved in the planning and deployment of at least one of these systems, I’d be happy to correct a few of your assumptions. Here’s one of the deployments I’m familiar with:

    • Brash, abrupt and conceited. That’s how your reply come across. Remember what your mother taught you, “Manners are important.’

  2. Does anyone know when these shortwave links were first erected? After Hibernia’s cable perhaps?

    @lifted: this blog details those microwave links in extensive detail over the last 5 years, this post refers to shortwave.

    • A first shortwave network was built in 2011 in the US (down now) – we’ll detail later. It seems trading firms started to build US-EU HF networks before Hibernia went live. More details to come.

      @lifted: Peter is right, don’t confuse shortwave with microwave…

      • What about satellites? Don’t know anything about radio, but it seemed to me that satellites would be the ideal way to do this low latency trading.

      • Satellites in low orbit, just a little above the ionosphere would have only a slightly greater latency than HF, but most of the communications satellites orbit about 23,000 miles up, with around a quarter of a second for a signal to traverse the earth-satellite-earth path.

  3. Maybe you find this article interesting (German only, sorry, maybe you get something not too nonsensical out using automatic translation), regarding “Shortwave Traders”, a startup founded by Andrej Pramen; they basically could not get a license to erect the tower nearby the exchanges in Frankfurt and NY, due to the high transmission power of ~2000W. The interesting bit is that they operate on a world-wide Ukrainian 20m-band license. No idea whether this tower is related

  4. They probably have filed a wavier request for experimental use of HF radio with the FCC, if they are transmitting from this site.

  5. There was a story some years back that inferred that trading info was getting from NYC to Chicago a few milliseconds faster than the standard means or wire or cable could do it. Is that explained by these shortwave links? I would think that the bandwidth limits would put very strict limits on the length of messages and the amount of redundancy added for error-correction that a few milliseconds of signal can contain. Is there any complementary information from the markets that would indicate who is trading what by these means?

  6. What, no transmitters?
    A very interesting article, thank you. I’d not heard of this type of network but it makes sense. I ask about the transmitters since that tower base doesn’t show any type of container for the transmitters, and the USRP is a receiver-only system. So, did you find a separate transmitter site? Spatial separation is your friend in HF links, and would indicate such.

    73, Brendan WA7HL/exNRDC, NMC1

    • The base of the West Chicago tower contains a building that wasn’t pictured. It could hold a 6 kW transmitter, which I believe the site is licensed for. I have no hands-on experience with USRP, but the Wikipedia page suggests that the mother board accepts various daughter boards for RX, TX, or both. I don’t believe that an experimental license is needed for RX, so it’s possible that the licensed site I found is TX only and that there’s another RX only site somewhere else. But my guess is that they operate the link in half duplex and have only the site I found.

      • I did see that, but only after all the other comments here and looking at Google Earth. I try to learn something every day…
        What struck me was that while the Ettus’ radios have TX daughterboards and so on, I have doubts that those little boards can do 6kW, so the Ettus must be used as an exciter for a much larger transmitter. Why no mention in the FCC papers? Interesting setup certainly, but could it be a hybrid installation using HF radios for trade executions only, and letting fiber handle the confirmations? If my meager understanding of HF trading is possibly correct, the latency is most important on the outgoing executions, but not on the incoming acknowledgments? I gotta read up on this stuff…

      • I think you have the right ideas about ACKs. I’m not current on FCC regulations, but I’m guessing that once an amplifier is type accepted, then the FCC cares mostly about what you excite it with. I’m assuming that there’s not a lot of tuning to do on modern broadband power amps, so if you’re outside your allowed bandwidth or on the wrong frequency, it’s because you fed the amp something bad. I’m just inferring this based what I see, so it could be wrong.


      • Thanks for the reply, Bob. An interesting chain of SDR ~ something, something ~ antennas. It all looks kosher to me, I’m less up on the regulatory end while I find the tech and the concept fascinating. This particular network has interesting frequency bands (esp. Seattle), and a lot of proposed data bandwidths. Cool stuff, and a good puzzle.

    • What is the inferred purpose of the stations in Seattle? Isn’t Portland closer to the far east?

      These applications show usage of frequencies around 5 MHz at US east coast/west coast/midwest stations.
      Are any of the antennas shown in the photos long enough (about 100 ft) for that frequency? I did notice that the Kane County picture had 4 tours arranged in a pattern resembling a rhombus. Which way is that pointing? If these stations are used over paths of 4,000 miles or more in that band, would not most of the path be in darkness during use? Are the commodities markets all operating around-the-clock worldwide? Given the narrow frequency bands shown in those documents, one would not have a great deal of trouble setting up near those stations and doing some traffic analysis.

  7. The fact that correlated prices exist in geographically-separated markets provides all the incentive traders need to build lower-latency ways to transmit prices. Chained microwave links between markets have been well documented in other posts on this blog. Their latency is significantly lower than fiber. They’re less reliable than fiber, have lower bandwidth, and don’t reach across oceans like fiber. Shortwave enters the picture in this post because it can reach across oceans like fiber, while maintaining the latency benefits of microwave, but sacrificing reliability and bandwidth. Even though shortwave has substantially lower latency than fiber, the hypotenuse up to the ionosphere makes the latency higher than chained microwave links, which just have to be high enough to clear the curvature of the earth and other obstructions.

  8. I keep getting black squares that show up whenever they please

  9. You and I must be brothers from another mother as I do this exact same thing. I’ll be driving with my wife in the car and she’ll go “Oh oh oh!!!! There’s another tower!” One day when she did that I pissed her off by pulling over and taking pictures just as you did lol. Love doing this rabbit hole research.

  10. If this high frequency trading is so lucrative, why don’t all these fast traders bundle their resources and establish a Tropospheric-Scatter link across the North Atlantic to give them a temporal advantage? Say, N. Canada Greenland Iceland N. Scotland, and existing traditional terrestrial microwave the rest of the way. Tropo is fast like HF Radio, but far more reliable. It also costs a lot more to build and run. The bandwidth is much larger than HF Radio, but far less than fiber (a typical Tropo link carrier runs at 2GHz). Traditional tropo links can run upwards to around 1,000 km each. But links that long are expensive to build and operate (think around $1+ Million per site). But utilizing the latest in coding and modulation techniques in a Software Defined Radio (SDR) those costs can probably be reduced from one to three orders of magnitude with an attendant reduction in the amount of usable bandwidth.

    • good f’ing luck *licensing* a tropo link, anywhere, for anything other than defense/military/etc use, in 2018.

      also: what do you think the rule of thumb is for excess path loss & gaseous loss on top of free-space loss for tropo? I’ll wait while you google it.

    • Traders don’t share resources … information arbitrage includes both the markets and technology to participate. I’m sure there are readers of this blog who are aggravated that these systems are becoming common knowledge. Traders that are getting picked off or seeing returns decreased in a market but hadn’t figured out why will be looking at this as a possible answer. The cool thing here is that there are many markets that this can be applied and the costs to erect and antenna to point towards emerging markets is trivial! The fun aspect of this for the spectators is that there are many SDR receivers all over the world that can be tuned to pick up these transmissions. Don’t expect to be able to be able to use the data though as the decode latency on those SDR’s is awful and the data itself will be obfuscated.

  11. Those who point out that HF has reliability issues need to remember that these companies don’t need to make every lucrative trade they could possibly make with a perfect communication channel. If these transactions are sure and profitable, they making half of them would remain profitable.

    As I see this working, you know something has been selling for a $1.00 in Chicago and just jumped to $1.01, you buy 100,000 of them at that $1.00 price in Europe. Then when the price increase hits mere fractions of a second later, you sell your $1.00 purchase for $1.01. You’ve just made a guaranteed $1000.

    Someone correct me if that’s not what’s going on here.

  12. Excellent post! I’m originally from Chicago (now live in SoCal), am also a ham and Dxer, and a good friend of mine used to work the Merc. This, tho, is new to me and I’m looking forward to reading more about it. Will you be posting freqs and mode(s) of operation?
    – KB2LUM

    • Dave, Glad you liked the post. Maybe we crossed paths at Bell Labs Naperville in the mid 80’s? Your name sounds familiar. The FCC experimental licenses (e.g. linked in comments above) do list a range of frequencies and emissions designators (i.e. modulation or mode). The range of frequencies is quite broad and many licensees file for pretty much any kind of modulation you can imagine, from on-off keying to QAM128. The bandwidth is also given, but I think 48 kHz is the largest I’ve seen. There are some SWLers who’ve picked up at least the test signals from experimental shortwave stations and recorded them. I believe there’s a link to one of those above too.

  13. Why don’t you tell us the frequency range of the antennas or what frequencies they are operating on. All trivial with a $7 RTL receiver on a tablet to see if they are transmitting and a compass and tape measure to figure out the antenna frequencies. I don’t understand why so many people are replying to this with fantasy when the facts are trivial to discover. For reference, I sold one of my Ettus Research radios to a perfectly normal cellular telephone company in singapore. they use them for diagnostics and as the RF section of cellular towers. The USRP can be configured as a fully functional multi channel cellular base station using entirely open source software. They have two or four coherent full duplex RF channels which means they are also useful for ranging and direction finding those signals in realtime as well as a coherent satellite relay. his is pretty basic stuff but most hams live in the 1960s on SSB and FM using 1940s radio designs. I can see how they might not realize the modern world has better tech.

  14. Very interesting! I checked the FCC filing, which shows the frequency ranges they are authorized. Do you know of any exact frequencies that thy use? I’m involved with a group of fellow radio hobbyists, and I wonder if these transmissions explain some of the signals we have been observing, and written off as being random military transmissions.

  15. You can find the licensed frequencies in the FCC license database and online websdr receivers can be used to ‘listen in’ … There is a lot of buzz on this topic and I know the author is covering this at the STAC conference and I’ll be talking about it at

    There are multiple ways to license these stations and the costs to build aren’t extortionate, especially considering the profitability of a riskless trade! Just think of all the markets globally that could be opened up .. HAM Radio will become the new must-have skill set for prop trading firms!

  16. Hi, suppose they use the same site for tx and rx? I kinda doubt it but it could be done. And yes it’d be interesting to see the waveform.

    • After the technology is proven, I can believe they might try simultaneous TX and RX (i.e. “full duplex”). But for now, I’m guessing they’re doing one or the other (“half duplex”). Full duplex from a single site is somewhere between technically very challenging and impossible. In a nutshell, it’s hard to hear anybody else when your own transmitter is on.

      There are a set of trades that follow the release of government statistics like non-farm labor. You know in advance when the announcement will happen and you have the transmitter hot on that end of the link.

      Note that the time required to switch the direction of a half duplex link is at least one full round-trip time. The current transmitter has to stop and wait for the last bit it sent to arrive at the receiver. Then the previous receiver can start transmitting, but the first bit it sends won’t arrive until it propagates back to the previous transmitter.

      • Any form of duplex operation would require licensed broadcast capability in that jurisdiction. I would suggest most trading strategies could work on the basis of a broadcast event at low latency and a regular speed confirmation. Essentially send the order via radio, receive the confirm via a regular link.

        A 10ms advantage to markets in Europe is a game changer, the same for many other markets this opens up. Firms using these will print money as a function of how reliable they can make the link and how many markets/strategies they can scale to.

        The open question is how do you defend your trading strategy against someone that can effectively see into your future?

  17. Last summer we ran across an identical site east of Chicago, west of Ft Wayne, about 1 mile north of highway 30. A number of us has been doing research and going crazy about what it could be.

    • Thanks, I have visited that site and photographed it. Details forthcoming.

  18. If the sites don’t employ full duplex via the same site, perhaps the rural sites are the rx end while the tx sites will be in the cities where rfi is no issue to the system performance. It’d also be interesting to see how much data they’re wanting to pass. A modified for commerce HFDL would be lovely for short fast buy/sell/ack but I suppose they’re passing gobs of data and will have several kc in use.

  19. I’ll just leave this here:
    WH2XVO Virtu Financial Operating LLC

  20. There’s another one in west chicago at someone’s house in oak meadows subdivision. Just west of 59, off the prairie path. It’s not as large, but extremely big for a backyard…


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