5. Computer controlled share dealing

Computers are now used to make automatic share deals without human intervention - it is called automated trading. A share dealing algorithm is used to make a deal in less than a millionth of a second. And there are many share-dealing computers running around the world that all rely on the same information.

The trading computer that gets the information before its electronic competitors has the advantage i.e. more profit.

Real life example:

It takes 65 milliseconds to send a message from London to New York via trans-atlantic fibre-optic cable. One company representative recently said "The speed of light limit is getting annoying".

Hibernia Atlantic, a cable company, is spending $300 million to lay a special cable across the Atlantic that will take 6 milliseconds less than standard to travel from London to New York. Share dealing companies will pay a premium for this faster data transfer.

The physics says that the speed of light is a third slower in glass than a vacuum / air. And so the solution is to use a more expensive hollow glass fibre rather than a solid glass core, so the light bounces through the air filled centre rather than through solid glass.

In this scenario, the accuracy of the data is not in dispute - the real advantage is in how quickly the information exchange occurs and 6 milliseconds is enough to give them an advantage over their competitors.

There is an excellent TED lecture (15 mins, 1 million views) from Kevin Slavin here about how algorithims control our lives. This includes the extreme lengths finance companies go to in order to shave a few microseconds off their dealing speeds.