[SFDXA] Ham Radio Enthusiasts Battle High-Frequency Traders for the Airwaves

[Bill]

The Wall Street Journal
The Wall Street Journal
<http://online.wsj.com/>


  Ham Radio Enthusiasts Battle High-Frequency Traders for the Airwaves

Story by Alexander Osipovich

Ham radio operators are sounding the alarm over the latest threat to 
their beloved hobby—and this time, it is coming from Wall Street.

A group of high-frequency trading firms are asking the Federal 
Communications Commission to open shortwave frequencies to greater 
commercial use, so they can use radio to zip financial data around the 
world in milliseconds.

Prominent members of the amateur-radio community say interference from 
traders’ broadcasts could ruin their hobby, which often involves tuning 
in to weak radio signals so they can chat with fellow hams in faraway 
places. Hundreds of hams have filed letters with the FCC opposing the 
traders’ proposal, and some have railed against the plan in YouTube videos.

Brock Fansler is among those speaking out. A 40-year-old Los Angeles 
resident with shoulder-length hair, he likes using his radio to send 
digital data about weather conditions to other hams. He complains that 
the traders are looking to transmit with up to 20,000 watts of power, 
whereas amateurs are capped at 1,500 watts, and many use off-the-shelf 
radios with 100 watts.

“They’re asking for an insane amount of power,” Fansler said. “It’s like 
having neighbors move in with a drum set and guitar. This is going to be 
blasted all over the planet, with how much wattage they’re going to put 
behind it.”

The group behind the proposal, called the Shortwave Modernization 
Coalition, says such fears are overblown. The coalition—whose members 
include such trading giants as Jump Trading Group, DRW Holdings and 
Virtu Financial—says it has already been using shortwave for several 
years and there haven’t been any verified complaints of interference.

“The proposed power limit is consistent with, and in many cases lower 
than, the levels used in these frequencies set aside for certain 
commercial uses,” a coalition spokeswoman said.

High-frequency traders have been in a yearslong arms race to execute 
transactions as fast as possible, or else risk losing money to speedier 
rivals.

In their quest for speed, HFT firms have located their computers in 
exchanges’ data centers, to avoid wasting fractions of a second 
transmitting buy or sell orders over computer cables. They have built 
arrays of microwave towers between Chicago and New York to beam data 
between markets, while exploring new kinds of cable and even satellite 
networks.

Shortwave is useful when HFT firms need to send rapid updates about 
price moves across oceans—for instance, from U.S. futures markets in 
Chicago to European futures markets in Frankfurt. The usual way to send 
data from one continent to another is undersea fiber-optic cable. But 
light moves more slowly through glass cables than through air, so it is 
faster to use radio—specifically, in shortwave frequencies. That allows 
waves to bounce up and down off the ionosphere, an upper layer of the 
atmosphere, allowing them to propagate around the globe.

Sending data from Chicago to Frankfurt is nine milliseconds quicker by 
shortwave than by undersea cable, according to data from Deutsche Börse. 
That is less time than it takes for a hummingbird to flap its wings.

As ultrafast traders have pushed into shortwave, they have aroused the 
ire of hams such as Matthew Penttila.

Penttila, a 51-year-old mechanic in Blackstone, Mass., routinely uses 
shortwave radio to chat with hams in other states and countries. Once he 
even spoke to a cosmonaut aboard the Mir space station, he recalled.

He is indignant that the traders want to use shortwave to save 
milliseconds and juice their profits.

“I’m just a regular, ordinary guy. I work 2 to 10:30 five days a week to 
try and keep a roof over my head and food on the table for my family. 
And these guys are going to try and exploit this for millions and 
billions of dollars. It just doesn’t seem right,” Penttila said.

If the FCC approves the traders’ petition, Penttila worries it will lead 
to further encroachment by private firms into bands of the radio 
spectrum used by amateurs.

“It becomes the camel’s nose under the tent. As soon as it gets its nose 
under there, it’s going to keep working, and the next thing you know 
it’s going to take the whole tent down,” he said.

An FCC spokesman said: “We appreciate the importance of amateur radio 
and make every effort to ensure spectrum uses do not interfere with each 
other.”

The Shortwave Modernization Coalition says it isn’t looking to grab 
amateur frequencies. Its petition has a narrower aim: to allow business 
licenses for the type of fixed, long-distance, point-to-point shortwave 
data transmissions used by HFT firms. Current FCC rules don’t allow such 
licenses. Instead, traders have mostly relied on temporary licenses for 
radio experiments. But experimental licenses generally aren’t intended 
to be used for commercial activities, and firms that use them for 
trading are operating in a legal gray area, according to industry veterans.

“The big companies have always been nervous that their experimental 
licenses could get shut down,” said Dave Gustafson, a former head of 
wireless engineering at Jump.

The roots of ham radio date to the late 19th century. Today there are 
about 760,000 amateur radio operators in the U.S., according to ARRL, 
the national association for amateur radio. ARRL says the ham population 
has climbed in recent years, defying predictions that the internet or 
social media would kill the hobby’s appeal.

Still, many amateur-radio clubs are dominated by retired men, sparking 
periodic jitters that there aren’t enough engaged young people to keep 
the hobby alive.

Leonard Gucciardo, a 62-year-old retired electrical engineer on Long 
Island, said he worries that traders’ broadcasts could prevent newcomers 
from embracing ham radio and the financial investment it requires. He 
estimates that he has spent more than $20,000 on radio equipment and 
fears that increased interference could render such equipment useless.

“Picture investing $25,000 on equipment, and it becomes a dinosaur that 
you just can’t use anymore,” he said.

The traders’ proposals have sparked a visceral response from many hams 
because radio is a way of life, said Rich Donahue, a 62-year-old from 
South Dakota who spends much of his time on the road in a 22-foot 
camper, traveling to ham conventions.

“They’re very passionate about their radio communications,” Donahue 
said. “They get up in the morning, they get a cup of coffee and get on 
the radio to talk to their friends.”

https://www.msn.com/en-us/money/markets/ham-radio-enthusiasts-battle-high-frequency-traders-for-the-airwaves/ar-AA1ePt95


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