The Case of the Small English Town vs The Large HFT Tower
We have a very interesting story to tell you about today. It’s the story of a very powerful Chicago-based HFT firm, DRW Trading, that tried to sneak a fast one by the small English town of Richborough. DRW Trading owns a subsidiary called Vigilant Global that is in the business of setting up microwave networks. As we all know by now, the name of the game in the HFT world is speed. But another important word is location. For their high speed microwave networks to be as fast as possible, the HFT firms need to pass the signal through the best possible route. Sometimes this involves installing microwave units on existing cell towers or on the tops of tall buildings, and sometimes this involves building a new tower altogether for their microwave antennas.
Last year, Vigilant Global was granted new radio licenses from the UK regulators for the Richborough, UK area. Why is Richborough so important? Richborough is the last stop before a microwave signal (which originated in Slough – just outside of London) crosses the English Channel on its way to Frankfurt, Germany. Slough is where Equinix maintains their colocation facilities (which house a number of exchanges) and Frankfurt is where Eurex, one of the world’s largest derivatives exchanges, is located. Think of this route as similar to the Chicago to New Jersey futures to cash route in the US.
Source: “Sniper In Mahwah” blog
While they received the licenses, Vigilant still had a problem. There was no tower in Richborough for them to set up their microwave antennas. Vigilant’s plan was to submit an application to the Ash Parish Council to build a new 324 meter tower (about 20 meters taller than the Eiffel Tower). Vigilant didn’t want to underestimate the council’s ability to deny their application so they put together a series of meetings late last year where they would try to sell their concept to the public (they also set up this slick website which was supposed to calm the residents fears about the tower). The meetings didn’t go so well for Vigilant as they were hammered with questions about the use and safety of the tower. Vigilant said that the tower was going to be used for data transmissions but cleverly avoided telling residents about the trading advantages that would be gained by the owner (DRW) of the tower. The residents however figured out the real use of the tower, high frequency trading, and were not too happy about Vigilant building this tower in their backyard.
Last week, the Ash Parish Council voted unanimously to reject Vigilant’s application and deny them the right to build their tower. Here is the statement from the Ash Parish Council:
Congratulations to the Ash Parish Council for standing up to Vigilant. We can only imagine how irate Vigilant must be that this small English town blocked their plans to gain an advantage for their European trading operation. We would bet that Vigilant already has an army of lawyers setting up an appeal and preparing for legal action against the citizens of Richborough. They probably are also already looking for another piece of land in a nearby community that could house their tower. We hope that other nearby planning boards follow the Ash Parish Council’s example and also deny their request.
If you want to read more about the story of the Richborough tower, we highly recommend that you read the blog posts titled “HFT in the Banana Land Parts 1-3” by the Sniper in Mahwah. We first met the Sniper a few years ago at a conference in Brussels and can sense the man had a passion for his work. The level of detail that he goes into in his blog posts about European microwave networks is truly amazing. The Sniper deserves an enormous amount of credit for his tireless work.