In the Australian Securities Exchange’s Sydney data room, which is about the size of a big lounge room, there are six “cuckoos”. These are the banks of servers installed by high-frequency traders.
They sit against the wall opposite the ASX servers and each is connected directly into the host by a fat fibre optic pipe. Each cable is precisely the same length by agreement with the ASX so that none gets an advantage; if one server is closer to the input, its cable is looped around to lengthen it.
Think about that: one less metre of optic fibre carrying data at 299.8 million metres per second – that is, the speed of light – would give one share trader an unfair advantage over the rest. It suggests that something pretty quick is going on.
The question is whether it’s fair to the rest of us; whether those six parasites with their suckers fastened directly into the heart of the ASX should be allowed to get away with it.