Makers vs. Takers

Plus: Liability Driven Investment, Mortgage Originators, Credit Suisse

In 2016, an affiliate of high-speed trading firm, Jump Trading, made an unusual purchase: It bought a field in the city of Aurora, Illinois. There, on the side of a brick hut, it mounted a pair of small microwave antennas and pointed them eastwards. Jump’s offices were only 35 miles away, but the antennas reduced its communication time with the Chicago Mercantile Exchange (CME), whose data centre was situated across the street from the field in Aurora. The antennas would receive financial information from the data centre via a short cable and beam it to financial markets on the East Coast. 

The field cost close to $14 million to buy but it allowed Jump Trading to shave a microsecond (one millionth of a second) off the time taken to exchange data with the CME. In the world of high-speed trading, that conferred a material advantage – even if it didn’t endure. Within a year, competitor DRW Holdings installed its own antenna on a light pole overlooking the data centre and McKay Brothers, a…