Speaking at a London conference on Tuesday, Donal Byrne, chief executive of Corvil, a high-speed trading technology company, caused a ripple of audible incredulity throughout the room when he suggested that trading speeds could be reduced to picoseconds in the not too distant future.
Josh who (a) reviews everything and (b) has a decent eye for garbage – made the obvious point. A nanosecond is a very short time. Light travels about 30cm in a nanosecond – so if you want nanosecond trading your computers need to in the same box – and probably your chips need to be on top of each. And even then it is problematic as the data for matching the trade will need to travel through the chips many times to be processed.
Light takes about 20 picoseconds to travel through a silicon chip. Presumably it has to do that a few times to complete a trade. So picosecond trading is an Einstein speed-of-light counterexample and Donal Byrne and his company are in line for a Nobel Prize.
Josh is more gentle than me – so I am gonna say it: Donal Byrne is a technologist speaking garbage.
When the leaders in the field start speaking easily identifiable egregious crap you know the game is nearing the end. And so it is for high frequency trading. If there were any decent return on capital for technology to make trading faster that return is likely to be pretty thin. (I would not invest in any fund that talks about that as its "edge".)
Of course we can all get smarter rather than faster. Including it seems Mr Byrne...