[I pleased to share Part II of “Shortwave Trading” by Bob Van Valzah. Part I had more than 25,000 views, which is quite insane. Thank you for all the comments we got. Comments in brackets [] and in italics signed SIM (as for SniperInMahwah] are mine – Alexandre. Happy reading]

I have previously claimed that trading over shortwave radio is real and presented the story of the first evidence I found of it. It was pleasantly surprising to see the story picked up by IEEE Spectrum, Hacker News, Hackaday, and others. But since I hadn’t anticipated such a diverse audience, I didn’t provide details needed to understand shortwave trading in context so a lot of questions were raised. I’ll provide some background here, answer the questions, and also document two other shortwave trading sites I’ve found around Chicago. Traders can skip ahead while I fill in the broader audience.

Why is there a latency race? Isn’t it just a waste of money?

Electronic trading technologist just take the latency race for granted, but it’s important to think about why it exists and what it means to the average person. When you want to fill your car with gasoline, you have the choice of going to the nearby gas station and accepting their price or perhaps comparing prices at stations a little farther away. We would all spend a lot more time comparison shopping if we didn’t have pretty good confidence that the prices at our local stations were competitive. But what keeps those prices competitive?

The analogy between your local gas station and electronic markets is admittedly imperfect, but I think it is helpful in understanding why latency matters and how you benefit. Nobody can buy a tanker of gasoline in New York and immediately sell it in Chicago. The laws of physics prevent us from economically moving such a heavy load over a long distance quickly. But a share of Apple stock weighs nothing. The Chicago price and the New York price can be compared and changed in an instant. Well, about 4 milliseconds is how long it takes for an updated price to make the trip. Prices can make about 250 one-way trips in a single second.

So when buying or selling Apple shares, you don’t have to shop around for the best price. Electronic trading companies have an incentive to build the fastest networks linking financial centers so that prices can move quickly between them. Buyers and sellers benefit because their local market has electronic traders who know the best prices on other markets and will be happy to do a local deal at the best global price (it’s market making). It doesn’t take a rocket surgeon to see the business opportunity in this type of trading, so high-speed traders have to be efficient because they’re competing against each other. The latency race has to happen for each market to have the best price. Competition between electronic traders limits their spend to the benefits that come with better pricing.

Why does radio help win the latency race?

Traders use radio because it can move prices faster than optical fiber.


This straight pen appears to bend when it goes below the surface of the water.

I won’t bore you with the physics, but I will remind you of this elementary school experiment where a pencil appears to bend in a glass of water. This happens because light moves more quickly through air than it does through water. In the same way, radio waves move more quickly through air than light can move through an optical fiber. In trading parlance, radio is lower latency than fiber over a given distance.

But radio is also faster because it almost always covers a shorter distance. Fiber paths tend to follow roads and property lines that may not go exactly in the desired direction. Radio towers may be inconvenient, but they give the advantage that the signal can take the shortest-possible path allowed by physics, not the kinky path dictated by rights of way [I explained that in the now famous “HFT in my backyard” – SIM].

The speed advantage of radio adds up as the distance increases. That 4 ms number I mentioned above is the microwave radio time of flight between Chicago and New York. (Well actually, it’s between the Chicago suburb of Aurora and the New York suburb of Secaucus that’s actually in New Jersey.) For comparison, the fastest fiber path on that route was 6.75 ms, for a radio advantage of 2.75 ms. On a Chicago to Europe shortwave path, the radio advantage is more like 10 ms.

The latency saved matters even over short distances. Bloomberg observed that a trading company had purchased land adjacent to CME, likely to replace a fiber path with a radio path. I measured and found a fiber path length of about 1,400 feet, versus a radio path length of about 1,000 feet. See aerial photo [I will detail what’s going on around the CME in Part IV, it’s quite amazing – SIM].


Replacing 1400 feet of fiber with 1000-foot radio path saves about 1 µs.

The 400 foot advantage may not sound like much, but that works out to about a 1 µs advantage when you take into account both the straighter, shorter path and the faster flight time. That’s only a millionth of a second and may not sound like much, but a zippy Xeon CPU can do about 3,000 instructions in that amount of time. So getting back to the point about efficiency above, traders without the land and hence the shorter radio path have to get the same number crunching done with 3,000 fewer instructions if they want to stay competitive [That’s what I will detail in Part IV – SIM]. Returning to the extreme case of shortwave vs. fiber between Chicago and Europe, a trader without shortwave is at a 30,000,000 instruction disadvantage.

What’s the difference between microwave radio and shortwave radio?

I’ve been rather cavalier here in comparing shortwave and microwave, even though they’re quite different. Comments on the previous post showed that there’s some confusion that I’ll try to clear up. Most articles on this blog are about microwaves which travel only in a straight line. The line cannot be obstructed by trees or buildings or pretty much anything else. A cup of water gets hot in a microwave oven because the water absorbs microwaves. Trees are mostly water, so they too absorb microwaves. Hence microwave antennas go on tall towers or mountains that clear the tree tops.

As the length of a microwave link gets longer, you need taller towers and larger antennas. You reach a point where it’s smarter to add a relay tower in the middle and make a two-link chain. Relays add some latency and cost, so designing multi-link microwave chains involves many compromises and tradeoffs. The exact number of links in the chain on the 840 mile path from Chicago to New York is a closely-guarded secret for each network, but it’s most likely more than 20, but less than 30.

Some of the microwave networks between Aurora and New Jersey. (From Laughlin, Aguirre & Grundfest paper “Information Transmission Between Financial Markets in Chicago and New York”, 2013)

The microwave links between Chicago and New York cross the southern tips of Lake Michigan and Lake Erie, but they can’t cross oceans because the distances are too vast. For that, you need shortwave or microwave/fiber hybrid networks like GoWest, covered previously on this blog.

How does shortwave stack up against microwave and fiber?

Fiber reliability is essentially perfect, but microwave links will have bad days, typically related to weather. Rain, snow, and ice in the path can absorb the transmitted signal before it gets to the receiver. Antennas can be 6 feet in diameter, so there’s a lot of force on them in a strong wind that can knock them off course. Still microwave reliability can be pretty good. Low-latency microwave pioneers McKay Brothers have a saying: “It’s better to be fast 99% of the time than slow 99.999% of the time.”

Shortwave, on the other hand, is much less reliable than microwave, for a variety of reasons. Electrical storms or man-made interference near the receiver can make so much noise that the faint signal from a remote transmitter cannot be heard. Shortwave depends on the vagaries of Earth’s ionosphere, a part of the upper atmosphere. Shortwave signals would typically only go a few hundred miles. But when ionospheric conditions are just right, some small fraction of the signal bounces or “skips” off the ionosphere and is reflected back to Earth, instead of just blasting off into outer space. So traders hoping to use shortwave for trading are at the mercy of many physical forces they can’t control. I couldn’t make any reasonable guess at a reliability percentage, but shortwave is far less reliable than microwave—probably a couple of orders of magnitude less reliable.

Even when the conditions are right for shortwave to work well, I wouldn’t expect bandwidth much better than a dial-up modem. Compare that to a few hundred megabits over microwave and 10’s of gigabits over fiber.

The low bandwidth with shortwave has a subtle consequence: the latency advantage over fiber can easily be consumed by the time taken (serialization latency) to send even a small message measured by fiber standards. The entire 10 ms latency advantage can be consumed by the time it takes to send a single 64-byte packet at dialup speeds. So shortwave traders need to have ways to very tightly encode their prices or other information in just a few bytes or bits—yet another pressure toward efficiency mentioned above.

Bringing all of the above together, we can make a table that compares fiber, microwave, and shortwave.


A comparison of fiber, microwave, and shortwave. Green backgrounds highlight relative advantages while red backgrounds highlight relative disadvantages.

The quick summary is that shortwave has the limitless reach of fiber and the lowest-possible latency of microwave, but it’s highly unreliable, expensive, and has the bandwidth of dialup.

When explaining the relative advantages of radio links and fiber, I often use the two gun analogy. Imagine that you are a trader with a message to send to a remote site. You have to write the message on a bullet to send it. You have a “fiber gun” in one hand and a “radio gun” in the other.

Every bullet from the fiber gun will reach the target, but some percentage of bullets from the radio gun will explode in midair and never get there. Bullets from the radio gun fly 1.5 times faster than bullets from the fiber gun. You can pull the trigger on the fiber gun as often as you like, but you have to wait, to reload, after firing the radio gun. The reload time can be milliseconds, opening the possibility of “shooter’s remorse.” You decide to take a shot with the radio gun, then quickly get new information that makes you want to shoot again before your gun has reloaded.

If traders send signals over radio, can others hear them?

The threat that has to be considered is a competing company that manages to get a receiving antenna closer to an exchange and figures out how to decode your signal. Not every trade is a winner-take-all opportunity, but no trader wants the cost of their transmitter to benefit competitors.

Encryption is the only answer I see. It’s fast since it only requires that each bit be XORed on transmit and receive with a secret bit pattern known only to the owner of the transmitter and intended receivers. Cryptographers have shown that XORing an information stream with a pseudo-random bit stream produces a new bit stream which is indistinguishable from noise. In other words, all traces of information are removed from the stream. So a receiver that doesn’t have the secret bit pattern can only receive noise.

Given the low data rate on shortwave, the secret bit pattern only needs to be a few MB long for a whole trading day. It only takes a fraction of a second to send this over a secure fiber link while the markets are closed. Better yet, just send a 256 bit seed to a cryptographic-quality pseudo-random number generator and you’re done.

Note that most Internet encryption protocols require lossless transport and so they won’t work on lossy shortwave. This is easily handled by advancing the encryption bit stream by GPS clock rather than by bits received.

What about satellite?

Geostationary satellites are out of the question for trading. Lots of bandwidth, but it takes 270 milliseconds to travel the distance to the satellite and back. Physics gets in the way.

Low earth orbit satellites are a possibility because they fly so much closer to the earth. I’m not aware of any constellations flying today that would be suitable for trading. Some on the drawing board might sometimes have a latency advantage over fiber under oceans. But none are an unconditional win over fiber because the path length changes as the constellation moves relative to the ground stations. See the talk by Stéphane Tyč of McKay Brothers for more info on the possible use of satellites for trading.

The ionosphere is closer to earth than the lowest of the low-earth orbit satellites, so shortwave will always have a shorter hypotenuse, and hence lower latency, than satellite. However, microwave signals just graze Earth’s surface so chained microwave links are lower latency than shortwave, over the mostly-land paths where they’re possible.

Are you spilling secrets?

No. The possibility of shortwave trading has been discussed on this blog and on Meanderful. I’ve just figured out how to find the FCC licenses in public records. The antennas are too big to hide. I’ve combined the above with maps, background info, and my analysis. It’s really no surprise, given that people want to have the best prices close to them so there will be a latency race. We should expect trading technology to shoot directly for the lowest latency allowable by the laws of physics. Put simply: Business + Physics = Shortwave.

When did this all start?

Some expired experimental licenses date back to late 2011. However, software defined radios have come a long way since then. The current round of license applications were sent in mid- to late-2015 [this is when I first heard about these projects– SIM]. The towers in Indiana, discussed above, were built between October 2016 and April 2017.

In March 2018, I photographed the cardboard box for the software defined radios used at the West Chicago tower. It was sitting in the garbage pile, on top of a pile of leaves that were not badly decomposed, so I assume it was installed after the fall of 2017. Further, the box was exposed to the elements of a Chicago winter and didn’t seem to be in bad shape at all. So I’m going to guess that it was actually installed more like February 2018. Fresh stuff.

What else have you found around Chicago?

I went to the FCC Experimental license database and found nine current hits for shortwave licenses within 100 miles of CME’s data center in Aurora. Two were bogus; one was the West Chicago site I stumbled onto. I visited four sites and found no shortwave antennas there. But that still leaves two interesting sites.

The first is near Wanatah, Indiana (41.457048°, -86.859156°). This site looks interesting from above.


Compare the size of the antenna to the farmhouse and the 18-wheeler.

You can see a large square area of the cornfield that looks different. There’s an access road leading to a light-colored part of the square. Note the sizes relative to the farmhouse and the 18-wheeler to see the scale.

That looked promising so I drove there and took this picture from the road at the bottom of the aerial shot above.


Wanatah antenna site as seen from nearest country road.

The FCC database says those two towers are 160 feet (49 meters) tall. They hold four monster log-periodic antennas according to another FCC database. I could see from the feed line that the antennas were configured to operate as a single large antenna. The license shows a 10 kW transmitter with an effective radiated power (ERP) of 768 kW due to the antenna gain. The database also confirms what you can see by eye in the aerial photo: the whole antenna site is pointed at a 50º angle, which solidly hits Europe with the 26º beam width of the antenna.

There’s a microwave dish on one of the towers. FCC licenses show the tower owner has a series of three microwave hops west to a site in Oak Forest, Illinois.


Office building in Oak Forest, Illinois where Wanatah tower owner’s microwave licenses stop.

This is a point of presence for a local wireless ISP UrbanCom.Net which also has an antenna on a tower adjacent to CME. My hunch is that the shortwave trader just buys bandwidth from UrbanCom for the rest of the path from Oak Forest to CME [When I parsed the FCC documents about the Wanatah facility, I was quite amazed to find the first name of an individual I like, that’s how I could figure out which trading firm is behind County Information Services, LLC, who built the antennas  – SIM].

The second site is just outside of Elburn, Illinois (41.926495, -88.499110°). The antennas here are log periodic like the others, but their structure is fundamentally different. Instead of using rigid aluminum tubing, this antenna is made from comparatively thin wire that is pulled taut by ropes and springs. The ropes attach to tall supporting trusses and to ground anchors to hold them in tension. This style of antenna is difficult to photograph because the wire doesn’t need to be very thick. I’ve overlaid blue surfaces on the photo to show the planes of the two stacked antennas.


Shortwave trading antenna site near Elburn, IL. Blue highlighting shows planes of antenna wires.

A search of the FCC experimental license database shows this site is licensed (by a firm named 10Band LLC) for a 20 kW transmitter with an ERP of 808 kW. The shortwave antenna is pointed at a 48º angle and Europe is well within the 38º beam width.

There is clearly a microwave dish antenna at this site, but I haven’t yet been able to find the FCC license for it. But I have been able to get a heading for the dish by taking GPS coordinates of photos taken along the beam path. It points at CME.

[When Bob and I started to map the shortwave antennas using the FCC database coordinates, my first move was to “watch” the facilities using Google Earth. For the Elburn site it’s useless…

Elbun, picture from Google Earth, 21/9/2015

… but thanks to this picture we learn the antennas were not there in September 2015. Someone told me to check another satellite imagery website, which is more up to date than Google Earth, and the antennas are there:

Elrbun antennas, picture from, 04/08/2018

By digging into the archive pictures, it seems like the antennas were erected in Elburn after May 2016. I got another picture of the site, sent by someone who wants to stay anonymous. I really don’t know who is he, but he has a lot of pictures of the various “HFT” shortwaves antennas, both in US and UK…

Elburn, picture from someone

That said, Bob’s picture below is more beautiful:

Elburn, picture from Bob

Last but not least, as always I was curious to know which trading firm is hiding behind the name 10Band LLC. Someone found that for me and sent me this ”Kane County Property Tax Inquiry“ link, where we can learn that the field where the antennas were erected was sold in 2011 for $1,338,325.00 to 10Band LLC, a firm in Chicago – I smiled when I recognized the address – SIM] 

Are you sure these antenna sites are really for shortwave trading and not a beacon for space alien body snatchers or something else?

I’m going to assume that space alien body snatchers wouldn’t bother with FCC licenses for their beacons. The sites I’m documenting here are all licensed to transmit on shortwave frequencies that could cross oceans.


Shortwave trading sites around Chicago. Solid lines are paths to London. Dashed lines are microwave links with CME.

Their shortwave antennas are all pointed at Europe. They all have a microwave link to CME. The IEEE Spectrum article on shortwave trading has deep links into the FCC database revealing the name of a trading company owning one of these sites.

What’s next?

I’m headed to the areas around New Jersey data centers to see if I can find shortwave antennas there.


[Nothing to do with shortwave trading here, but thanks to Bob I had a lot of fun with this website. In the US the FCC database does not include the licences for millimeter waves – millimeter wave frequencies are often less crowded than microwave frequencies, so millimeter waves are interesting in urban environments. Traders use millimeter waves both in London and Chicago. I searched for all the millimeter waves licences around Aurora and got a long list starting with this:

Boring, but I clicked on the kmz button and got quite an amazing Google Earth map (click to enlarge):

Aurora <-> Cermak

This map shows all the millimeter waves licences going from Aurora (CME) to Cermak (ICE) – including old licences that are far from the straight line between the two data centers. The line of sight is in yellow, and the first Fresnel Zone is in red. 

Then I searched the licences for the (New Jersey) Equity Triangle (Mahwah-Secaucus-Carteret). From above the triangle looks like that…

The Equity Triangle

…but it’s more amusing to watch it more closely:

The Equity Traingle millimeter waves networks, from Carteret (at the bottom)

The Equity Triangle millimeter waves networks, from Secaucus (at the bottom)

By the way, I say hello to the boss of the China cat! Perhaps the cat is somewhere in this 2160p video made with a drone in my backyard:

That’s all folks – SIM]


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

“I will be back”

FOW Conference – Amsterdam – March 7th

Hello everybody. As pointed out by a couple of folks (hello Pedro) who attended my (too long) talk at Fow Trading Amsterdam two weeks ago, this blog has been outrageously silent far too long. Not that I don’t have interesting stories to write about (I have too much to tell), but this academic year has gone by very fast. It’s done now, classes are over and I have a few months to do research, to post here all the drafts I prepared, to write a new book about HFT, “The towers war” (title non-contractual) – I didn’t even write a single line… –, and to finish a proposal for a wider study/book I would like to do in the next three/four years. This proposal will be finished next Monday, so that next week I’ll be able to switch on again this blog (starting with an updated and developed version of my FOW talk – slides will be available).

In the meantime, if you want a reading, here is an English translation of a text I wrote two years ago as a foreword for a new edition of a very famous old dictionary, Dictionnaire historique et critique de Pierre Bayle. It’s all about data, data centers and coding, typography and regexps, and so on. That’s when I worked on this Arca studiorum data center (picture below) years ago that I understood the exchanges were now in data centers… so begun my investigation into the so-called “high-frequency trading”. This text is here. I hope you’ll enjoy it. See you next week to talk about canaries flying fast in Chicago.