The financial industry relies heavily on the speed and reliability of data transmission to execute trades and manage orders. In the fast-paced environment of stock exchanges, where milliseconds can translate to significant financial gains or losses, the method by which order data is transmitted is crucial. Wireless microwave networks have emerged as a critical technology for order transmission, offering numerous advantages over traditional methods.
How stock exchanges use wireless microwave networks
Wireless microwave networks transmit data using high-frequency radio waves, providing a direct line of communication between stock exchanges and trading firms. This method bypasses the latency issues associated with fibre optic cables, which often take longer, more circuitous routes.
In practice, microwave networks are used to create more direct connections between trading venues and firms’ data centres, significantly reducing the physical distance that data needs to travel. These networks are engineered to ensure the shortest possible path, often spanning hundreds of miles with minimal signal degradation.
Euronext Wireless Network EWiN
Euronext recently launched its own wireless network (EWiN) that uses microwave technology. This service is set to significantly enhance the speed of order transmission between London and the exchange’s data centre in Bergamo, offering unparallelled improvements in latency for Euronext’s London-based members that will choose EWiN.
By leveraging the faster transmission speeds of microwave technology, EWiN provides a direct and highly efficient communication pathway that significantly reduces the time it takes to send orders to Euronext’s single liquidity pool, powered by the single technology platform Optiq®.
Euronext is the first exchange in Europe to offer a Plug & Play solution for trading via microwave technology, which has roughly half the latency of the fastest fibre routes available (less than 4ms one way, compared to 6-8ms one way through fibre).
Banks and brokers will benefit from reduced latency and greater market efficiency, enhancing execution quality for investors. Euronext members can request tailor-made bandwidth based on the order entry capacity they want to allocate to this service.
This new service is provided in collaboration with McKay Brothers, the largest independent microwave network provider in Europe.
The future of data transmission
The transmission of stock exchange order data via wireless microwave networks offers significant advantages in terms of speed, reliability, and cost-effectiveness. In the competitive world of high-frequency trading, the ultra-low latency provided by these networks can be the difference between profit and loss.
With the continuous advancements in microwave technology, these networks are set to play an increasingly vital role in the financial sector, ensuring fast, secure, and efficient data transmission.
As trading continues to evolve and the demand for speed intensifies, wireless microwave networks will remain a cornerstone of modern trading infrastructure, enabling market participants to stay ahead in the race for speed and efficiency.