Name: Slowing Down A Stock Exchange With 38 Miles Of Cable
Uploaded: 2020-04-01T01:13:05.000Z
Duration: 4 min 39 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

- A modern stock exchange isn't people yelling at each other

To-infinitive

a computer system that takes in all the information

of who wants to sell, who wants to buy, and what prices they want,

and exchanges money and shares automatically as fast as it can.

something called high-frequency trading appeared:

computers trading on a stock exchange faster than any human ever could,

and reacting instantly before anyone else can.

The faster they react, the more money they can make,

on moving their equipment closer to or even inside the exchange,

or building private microwave and cable links

that send signals faster than anyone else.

was to see someone else send a trade request

and then get the same offer to the exchange faster,

and then sell them on for a tiny, tiny profit

thousands and thousands and thousands of times.

Each microsecond advantage could mean more profits.

These days, though, so many companies have spent so much money

They're all as close to the exchanges as they can be,

and the signal routes are as close to light speed

When everyone's bought the same expensive advantage,

and it's being used by another stock exchange

- IEX is now a fully-fledged stock exchange,

so a lot of people obviously know names like New York Stock Exchange and NASDAQ.

We're regulated and established the exact same way as those stock exchanges.

Sometimes, people will take the argument of 'high-frequency trading is bad'.

What we'll tell you is, there's nothing wrong with those strategies,

but different than any other stock exchange,

what we've done is we level the playing field for not only those folk,

but also for the slow traders, the human traders,

and the only way in which you can really do that

is actually, as an exchange, to slow things down.

you're obligated to know what's going on in all markets,

so the only way in which you can do that is

you have to connect to all the other markets,

you have to take in all these super-fast feeds,

and you have to make a determination on the best price at that time.

quicker than the exchange they're trading on,

then they can pick off people trading on that exchange

before the exchange even knows what the new price is.

we can make a determination on what the fairest price is,

and as long as someone is not 350 microseconds faster than us,

we will always have the clearest snapshot on what the true price is in the market,

The biggest proponent of delay is something called propagation delay.

Just means the further away you are from the signal,

so we said, why don't we introduce distance?

We called up a fiber-optic provider, and we asked them to coil cable for us,

so anyone who wants to trade on our exchange

has to come in and traverse this distance.

and that's totally fine with them being fast,

they'll never be 350 microseconds faster than us,

so we can always ensure that we give our clients the fairest price.

The filing to become a stock exchange for IEX

was the most controversial filing of any stock exchange ever.

'you can't possibly introduce a speed bump into the market'.

'It's going to cause a calamity in the markets.'

I always found it funny, like in a market

that has billions of dollars of technology invested into it,

the most talked-about thing is IEX's exchange filing

but this $27,000 literally has billions and billions of dollars

So, it was worth the battle. We did get approval,

and the SEC two years later put out a white paper

saying not only did the calamity not occur in the market,

has been more stable since IEX became a stock exchange.

- Sure, you could do this by having a computer receive every signal,

wait for however long you want, and then send it on.

High-grade fiber-optic cable is expensive stuff,

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Slowing Down A Stock Exchange With 38 Miles Of Cable

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