The fastest-yet communications cable in Asia came online today (Aug. 20). The underwater fiber optic cable links Japan, Hong Kong, the Philippines, Malaysia and Singapore for high-speed, computerized stock trading.
The system transmits information at 40 gigabits per second, three milliseconds faster than any other system in the region, the BBC reported. "The gain may sound small, but could prove critical to financial trades made out of the region," according to the report.
The cable will affect computer-controlled transactions called high-frequency trades. In such trades, several banks' computer systems may decide to buy or sell a stock at the same time. Then, the race is on to see which computer will put its trade through first, Ralph Silva, a strategist at Silva Research Network, told the BBC.
Lessons learned from the March 2011 earthquake in Japan, as well a 2006 quake in Taiwan, affected the placement of the new cable. Both earthquakes damaged undersea cables. The companies involved in laying down the new cable chose a position nearer the Philippines, which a senior director for one of the companies, Hiroyuki Matsumoto of NTT, said is "very safe and reliable." The cable was also laid as straight as possible to speed communications.
Speedy, automated financial trades have come under scrutiny recently. Just a few days ago, the Los Angeles Times reported the Australian Securities and Investments Commission has proposed a "kill switch" for computerized trading programs, in case such programs run into a glitch. A program run wild cost the U.S.-based Knight Capital Group $440 million Aug. 1, and the U.S. Securities and Exchange Commission is also considering stricter rules for new trading programs.