I was puzzled by a Bulgarian Offnews piece stating that High frequency trading companies might have used insider trading to gain an estimated $600 mln of profits. Or that the laws of Physics has been possibly violated. HFT traders somehow managed to start trading immediately upon U.S. Federal reserve announcement at exactly 2 p.m. on Sep 18, 2013.
The puzzle comes from the fact that the distance between Chicago and Washington D.C. is 960 km. Theoretically light needs 3.2 ms to travel that distance (in air!). However, trading has started 3 ms after 2 p.m. So, what has happened?
I've started some news research. I found this one, talking about possible neutrino line of communications, that might shave few parts of milliseconds off the route between Chicago and D.C. Then I found a post in Washington Post blog, stating that travel time is 7 ms, and that the trading might have violated the laws of physics. The CNBC publication is addressing the issues in the right direction.
The talk here is about Physics. More precisely, the basic high-school physics education of journalists.
Author of the Offnews piece had obviously done some "research". He found out on Google that the distance between Chicago and D.C. is 960 km (based on the airline travel routes data), has calculated that light would travel this distance (when in air/vacuum) for 3.2 ms and offered a lot of speculation around that. He obviously used the MJ material and wrongly interpreted that neutrino travels faster than speed of light.
The WP journalist Neil Irwin speculated that the travel time is 7 ms, obviously he has heard it from somewhere. And based on that - he also speculated that someone has violated the laws of Physics.
Poor laws of Physics. Everyone trusts them, and everyone wants them violated. Well, not everyone, journalists in those publications at least.
First, the cities are not point objects and their sheer size could shave or add few parts of a millisecond, so 3, or 3.2 ms is practically one and the same, given that data centers of those bad HFT companies might have been optimized to be on the smallest possible distance between the cities.
Second, speed of light is indeed an absolute limit, however, in medium, it travels much slower. In glass fiber it travels almost 30% slower to around 208 000 000 m/s. So indeed in fiber this distance would require around 7 ms.
Another possible explanation (if there is a delay at all because it seems there was none) might be that fact that HFT are busy installing low-latency microwave links between major financial hubs, in order to take advantage of exactly the difference of the speed of light in air and and in glass. I like the articles here and here
So, fellow journalists, please, do not discontinue the laws of Physics just yet. Einstein has yet to be proven wrong!