The Speed of Money

Some Americans still believe stock market sales are typically made human-to-human, but the vast majority of buys and sells now are made automatically by computers, running pattern-detecting programs designed to execute millions of trades, in some cases, less than one second before rival computer programs attempt the same trades. In September, a Federal Reserve Board crisis involved, at most, seven milliseconds’ time. The Fed releases market-crucial news typically at exactly 2 p.m. Washington, D.C., time, tightly controlled, transmitted by designated news agents via fiber optic cable. On Sept. 18, somehow, traders in Chicago reportedly beat traders elsewhere to deal an estimated $600 million worth of assets — when theoretically, access to the Fed’s news should have been random. In other words, the drive to shave milliseconds off the “speed of light” has become quite profitable.