Islands at the Speed of Light

A recent paper published in the Physical Review has some astonishing suggestions for the geographic future of financial markets. Its authors, Alexander Wissner-Gross and Cameron Freer, discuss the spatial implications of speed-of-light trading.

Trades now occur so rapidly, they explain, and in such fantastic quantity, that the speed of light itself presents limits to the efficiency of global computerized trading networks.

These limits are described as “light propagation delays.”

[Image: Global map of “optimal intermediate locations between trading centers,” based on the earth’s geometry and the speed of light, by Alexander Wissner-Gross and Cameron Freer].

It is thus in traders’ direct financial interest, they suggest, to install themselves at specific points on the Earth’s surface—a kind of light-speed financial acupuncture—to take advantage both of the planet’s geometry and of the networks along which trades are ordered and filled. They conclude that “the construction of relativistic statistical arbitrage trading nodes across the Earth’s surface” is thus economically justified, if not required.

Amazingly, their analysis—seen in the map, above—suggests that many of these financially strategic points are actually out in the middle of nowhere: hundreds of miles offshore in the Indian Ocean, for instance, on the shores of Antarctica, and scattered throughout the South Pacific (though, of course, most of Europe, Japan, and the U.S. Bos-Wash corridor also make the cut).

These nodes exist in what the authors refer to as “the past light cones” of distant trading centers—thus the paper’s multiple references to relativity. Astonishingly, this thus seems to elide financial trading networks with the laws of physics, implying the eventual emergence of what we might call quantum financial products. Quantum derivatives! (This also seems to push us ever closer to the artificially intelligent financial instruments described in Charles Stross’s novel Accelerando). Erwin Schrödinger meets the Dow.

It’s financial science fiction: when the dollar value of a given product depends on its position in a planet’s light-cone.

[Image: Diagrammatic explanation of a “light cone,” courtesy of Wikipedia].

These points scattered along the earth’s surface are described as “optimal intermediate locations between trading centers,” each site “maximiz[ing] profit potential in a locally auditable manner.”

Wissner-Gross and Freer then suggest that trading centers themselves could be moved to these nodal points: “we show that if such intermediate coordination nodes are themselves promoted to trading centers that can utilize local information, a novel econophysical effect arises wherein the propagation of security pricing information through a chain of such nodes is effectively slowed or stopped.” An econophysical effect.

In the end, then, 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. Imagine, for a moment, the New York Stock Exchange moving out into the mid-Atlantic, somewhere near the Azores, onto a series of New Babylon-like platforms, run not by human traders but by Watson-esque artificially intelligent supercomputers housed in waterproof tombs, all calculating money at the speed of light.

[Image: An otherwise unrelated image from NOAA featuring a geodetic satellite triangulation network].

“In summary,” the authors write, “we have demonstrated that light propagation delays present new opportunities for statistical arbitrage at the planetary scale, and have calculated a representative map of locations from which to coordinate such relativistic statistical arbitrage among the world’s major securities exchanges. We furthermore have shown that for chains of trading centers along geodesics, the propagation of tradable information is effectively slowed or stopped by such arbitrage.”

Historically, technologies for transportation and communication have resulted in the consolidation of financial markets. For example, in the nineteenth century, more than 200 stock exchanges were formed in the United States, but most were eliminated as the telegraph spread. The growth of electronic markets has led to further consolidation in recent years. Although there are advantages to centralization for many types of transactions, we have described a type of arbitrage that is just beginning to become relevant, and for which the trend is, surprisingly, in the direction of decentralization. In fact, our calculations suggest that this type of arbitrage may already be technologically feasible for the most distant pairs of exchanges, and may soon be feasible at the fastest relevant time scales for closer pairs.

Our results are both scientifically relevant because they identify an econo-physical mechanism by which the propagation of tradable information can be slowed or stopped, and technologically significant, because they motivate the construction of relativistic statistical arbitrage trading nodes across the Earth’s surface.

For more, read the original paper: PDF.

(Thanks to Nicola Twilley for the tip!)

Car park picturesque and the Texas tower

On a site that is rather amazingly drenched with typos, misspellings, and other grammatical errors, we found this call for developing a car park picturesque, or “landscaped tarmac for leisure” – surely the post-human car park could be retroverted for this…?
Meanwhile, for all you Maunsell Towers fans –

– there’s the Texas tower: 75 miles east of New Jersey, though now collapsed into the sea, it was “intended to provide advance warning of enemy air attacks,” as “part of the Distant Early Warning system (DEW line) encircling the United States and Canada.” It collapsed into the sea, however, and killed everyone on board. Archigram meets James Cameron’s Abyss.

So I’m writing this at the beginning of a month-long James Bond marathon on AMC-TV, and am thinking, in this context, how all of Bond’s villains seem really to be renegade techno-architectural contractors of some sort: you have that fake volcano movie, the hollow high-tech island of Dr. No, that stupid ice-city of the last (please!) Pierce Brosnan Bond, and what else was there – oh, Moonraker

– in a particularly aerospatial moment of villainous ambition. In any case, then it occurred to me: that’s exactly what Osama bin Laden is/was – he’s a contractor. He built highways.
Plus ça change: he’s an ultra-rightwing Bond villain.

Maunsell Towers Sea Forts

Speaking of Gunkanjima Island… There’s also the Maunsell Towers:

“The [Maunsell Towers] Thames Estuary Army Forts were constructed in 1942 to a design by Guy Maunsell, following the successful construction and deployment of the Naval Sea Forts. Their purpose was to provide anti-aircraft fire within the Thames Estuary area. Each fort consisted of a group of seven towers with a walkway connecting them all to the central control tower.” Constant’s Babylon meets the economic mobilization of WWII. These look like a cross between the Empire’s attack-convoy robot-walker things in *The Empire Strikes Back* and, yes, Constant’s Babylon:

As such, these are dying to be used in a film.
Another site verges on the illiterate, but it’s clearly enthusiastic, and explains the towers’ construction.