Spread Networks

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Spread Networks is a company founded by Dan Spivey and backed by Jim Barksdale (former CEO of Netscape Communications Corporation) that claims to offer Internet connectivity between Chicago and New York at ultra-low latency (i.e. speeds that are very close to the speed of light), high bandwidth, and high reliability, using dark fiber.[1][2] Its customers are primarily firms engaged in high-frequency trading, where small reductions in latency are important to the extent that they help one close trades before one's competitors.[3][4][5]

History[edit]

The first cable line, from Chicago (home to the Chicago Mercantile Exchange, where futures and options are traded) to Carteret, New Jersey (home to the Nasdaq data center), laid at a cost of $300 million USD, was unveiled in June 2010.[3][5][6] According to a Forbes article, the idea for the line first came to Dan Spivey in 2007: Spivey contracted with a New York hedge fund to devise a low-latency arbitrage strategy, wherein the fund would search out tiny discrepancies between futures contracts in Chicago and their underlying equities in New York.[5] Although he successfully created the strategy, he was not able to execute it because he was not able to get access to the market's lowest-latency line.[5] He spent some time researching the feasibility of building an ultra-low-latency line, and then looked for people willing to fund it and found Jim Barksdale.[5] Construction was in full swing (but in extreme secrecy, to avoid getting scooped by competitors) by early 2009.[3][5]

In October 2012, Spread Networks announced latency improvements, bringing the estimated roundtrip time from 13.1 milliseconds to 12.98 milliseconds.[7] In January 2014, Spread Networks announced that it had opened a point of presence at the NYSE Euronext trading center located in Mahwah, New Jersey.[8]

Technology[edit]

Spread Networks uses fiber optic cables along a route as close to straight as possible to connect the Chicago area with the New York area, specifically connecting Chicago (home to the Chicago Mercantile Exchange) to Carteret, New Jersey (home to the Nasdaq data center).[2][4][5] According to their website, the network is monitored continuously and all parts of the network are driven daily to guarantee reliability and proactively fix issues. They also offer collocation facilities for servers at Chicago, Carteret, New Jersey, and Cleveland (Ohio), all along the line. Their estimated roundtrip time along the dark fiber line (from Chicago to Carteret, New Jersey) is 13 milliseconds.[4][7][9] Their wave service lines promise roundtrip times of about 14.1-14.2 milliseconds,[10] down from about 14.6 milliseconds in 2011.[11]

According to a WIRED article, the estimated roundtrip time for an ordinary cable is 14.5 milliseconds, giving users of Spread Networks a slight advantage. However, because glass has a higher refractive index than air (about 1.5 compared to about 1), the roundtrip time for fiber optic cable transmission is 50% more than that for transmission through the air. Some companies, such as McKay Brothers and Tradeworx, are using air-based transmission to offer lower estimated roundtrip times (9 milliseconds and 8.5 milliseconds respectively) that are very close to the theoretical minimum possible (about 7.5-8 milliseconds).[4]

See also[edit]

References[edit]

  1. ^ "Spread Networks". Spread Networks. Retrieved January 26, 2014. 
  2. ^ a b "Network Map: The Shortest and Straightest Routes Available". Spread Networks. Retrieved January 26, 2014. 
  3. ^ a b c Troianovski, Anton (April 3, 2012). "Optical Delusion? Fiber Booms Again, Despite Bust". Wall Street Journal. Retrieved January 26, 2014. 
  4. ^ a b c d Adler, Jerry (August 3, 2012). "Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading". Wired Magazine. Retrieved January 26, 2014. 
  5. ^ a b c d e f g Steiner, Christopher (September 9, 2010). "Wall Street's Speed War". Forbes. Retrieved January 26, 2014. 
  6. ^ Buckley, Sean (June 23, 2010). "Spread Networks tightens up latency along Chicago to New York route". Fierce Telecom. Retrieved January 26, 2014. 
  7. ^ a b "Spread Networks improves latency on Chicago-New York route". LIGHTWAVE. October 8, 2012. Retrieved January 26, 2014. 
  8. ^ "Spread Networks Opens Point of Presence at NYSE Euronext Mahwah: Fastest fiber optic network connection between New Jersey and Chicago now available at Mahwah". PRNewsWire. January 10, 2014. Retrieved January 26, 2014. 
  9. ^ "Carteret to Chicago Dark Fiber – 13.00 milliseconds roundtrip". Spread Networks. Retrieved January 26, 2014. 
  10. ^ "Spread Networks Latencies for Ultra Low Latency Services". Spread Networks. Retrieved January 26, 2014. 
  11. ^ Schmercken, Ivy (March 28, 2011). "Spread Networks Clocks Latency Under 14.75 Milliseconds". Wall Street and Tech. Retrieved January 26, 2014. 

External links[edit]