Communication technologies often dictate the geographical layouts of financial markets, but future developments may result in a radical realignment.
BLDGBLOG reports on how an eventual computational bottleneck caused by the ever increasing rapidity of trades may necessitate a drastic refiguring of the topography of financial markers. A new report speculates upon how the speed of light will ultimately limit the efficiency of global computerized trading networks. In order to remedy this ‘light propagation delay’ ceiling the analysts table a radical solution.
To circumvent any undesirable delay it would be advisable for traders to install themselves at specific points on the Earth’s surface to take advantage both of the planet’s geometry and of the networks along which trades are ordered and filled. These points scattered along the earth’s surface constitute “optimal intermediate locations between trading centers,” each site “maximizing profit potential in a locally auditable manner.”
What’s truly remarkable about this report is that many of the desirable points for such an operation are incredibly remote locations, with many located in the midst of the Pacific and Indian Oceans. The reports conclusions will thus strike a chord with anyone taken by recent reporting on liberal seasteading ambitions
“They more or less explicitly argue for the economic viability of building artificial islands and inhabitable seasteads—i.e. the “construction of relativistic statistical arbitrage trading nodes”—out in the middle of the ocean somewhere as a way to profit from speed-of-light trades”