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How to slow down a stock exchange

How to slow down a stock exchange

Tom Scott
1 HN recommenders · discussed 2019–2023
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About this video

Tom Scott visits IEX, a stock exchange that slows down trading with a long coil of fiber. The coil removes the speed advantage of high-frequency traders.

Why it appears in the archive

Cited as a quick, visual explanation of IEX's deliberate latency and of artificial delay as a fairness tool.

AI-generated summary and labels from the source dataset; verify important details against the video. Source & credits.

From the Hacker News discussion

m0rphling · 2019-08 · rec

Tom Scott did a nice video [1] on IEX's setup with 38 miles of fiber to add enough latency as a mechanism of fairness. Purportedly, this benefits all exchanges after it was successfully deployed. It seems like the incentives are not there for larger, more established exchanges to implement such blanket latency. So, firms like GS see a benefit to this kind of investment. [1] [VIDEO]

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anfractuosity · 2020-06 · reference

The IEX stock exchange uses fibre to introduce a fixed delay - [LINK] "This 350 microsecond delay adds a round-trip delay of 0.0007 seconds and is designed to negate the certain speed advantages utilized by some high-frequency trader" I watched this short video about it too - [VIDEO]

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n3k5 · 2020-10 · reference

Tom Scott made a short video about these cables: [VIDEO] 61 kilometres of fibre-optics for a 350 microsecond delay.

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bigmattystyles · 2021-01 · reference

Do exchanges like HF traders? I know HF traders themselves justify their own existence by claiming they provide liquidity to the markets, but I've always just sort-of rolled my eyes at that. They only extract value and provide none, in my opinion, tax the profits heavily. I think every exchange should pad each order by a random number between 0 and 250ms, it would take care of it. The company profiled in this video add lag [VIDEO]

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colejohnson66 · 2022-05 · reference

Not apocryphal; IEX has 38 miles of wire in their building. Tom Scott did a video a few years ago about it: [VIDEO]

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blibble · 2022-05 · reference

the wire thing is definitely real for IEX it's part of the exchange's license and they have several videos of the rather large wire there's even a tom scott video on it: [VIDEO]

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kmeisthax · 2023-07 · reference

There's actually an exchange that did this. In order to avoid software problems that would negate the slowing, they actually plugged their servers into a giant box full of fiber optic cable. If someone manages to get past that, then they don't have an HFT firm, they have a time machine. [VIDEO]

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