Heat and Humidity Slows High Frequency Trading Due To Microwave Links

szczys writes: Even tiny slowdowns have major ramifications on automated stock trading. To put the computing power as close to the markets as possible, microwave links connect Wall Street to server installations in New Jersey. Hot weather, especially when accompanied by high humidity, slows those links down enough to make an impact on trading:

For short-haul links around the financial centers in New York, though, dedicated network links are favored for low-latency connections. Rather than trusting their trades to the vagaries of the Internet and risk an unfavorable routing path or a cable severed by an errant backhoe, high-frequency trading firms often rely on microwave links to exchange information. [...] As it turns out, those microwave connections are the weak link in the system. During the early July heatwave, the links were experiencing slight delays in transmission times over that 16-mile path and throwing off the timing of the trading algorithms. The delay was minuscule — on the order of 10 microseconds — but in a business where millions are made and lost in seconds, that’s substantial.