If the heat wave and the accompanying humidity make you feel that the world is moving a little slower than normal, then you are right – at least in terms of radio transmission. Nasdaq warned customers on Tuesday that the weather caused a slight delay in data transmission, which could affect stock trading.
Bloomberg reported on a report issued by the company that reminds traders who will immediately count on response time when executing a transaction. The humidity of these transactions will cause several additional micro-transfers between information movements between facilities in New York and New Jersey. Seconds can be completed.
The East Coast, which includes the Nasdaq-operated area, is on hot springs for most of the day, with temperatures as high as 93 degrees. According to the humidity factor, the CNN heat index values in New York and New Jersey are as high as 105.
This is enough to prevent the transmission of information by radio transmission. According to Bloomberg, Nasdaq said that the information it sent to its Carteret, New Jersey, facility to the New York Stock Exchange data center in Mahwah would take tens of seconds to move. The company said it would take an additional 2 microseconds to send information to Secaucus' Cboe Global Markets exchange.
A 2015 study by researchers at Jyvaskyla University and the Finnish University Alliance Chydenius found that heat and humidity have an impact on radio signal strength:
For the average person, the difference of a few microseconds is basically meaningless. A study by the Massachusetts Institute of Technology found that the human brain can recognize images within 13 milliseconds, or 13,000 microseconds. But for a trading company that relies on a computer system to trigger a transaction, these slight losses can mean significant differences in results.
High-frequency traders (HFTs) have long used the delay to cause a slight delay in data transmission to make money. In 2015, financial market consultancy Nanex found that HFT had an advantage of 500 microseconds compared to average traders in receiving Nasdaq quotation data. An analyst at Nanex told MarketWatch that different transactions are basically “no risk” for high-frequency trading because “they know how the two sides will appear before the button is pressed.”
Between the slightly slow stock trading of the Michigan Avenue Bridge in New Jersey and Chicago, it was strange that the fire department needed its hose to reduce the metal expansion caused by heat. It is best to stay inside.
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