This guy makes high-speed trading even speedier

CEO of Anova Technologies uses high-frequency radio wave technology that travels twice as fast as fiber optic to connect Chicago and New York

May 1, 2014 @ 9:41 am

By Lynne Marek

high-speed trading, high-frequency trading, equities, futures, options, chicago, new york, market structure
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Glass, it turns out, slows the speed of light. That means those digital bits of information zipping through fiber-optic strands aren't reaching their destination as fast as they might.

It's not an important lag if, say, you're binging on “House of Cards.” But it is a very big deal in the world of high-speed financial trading, where a delay of a millisecond can be too long. Mike Persico, founder and chief executive of Anova Technologies, works in this world.

(Don't miss: Answering the questions high-frequency trading raises)

In his quest to construct faster links between trading firms and exchanges in Chicago and New York, Mr. Persico came across a high-frequency radio wave technology called millimeter wave that travels twice as fast as fiber optic. After a business partner, AOptix Technologies Inc. paired millimeter wave with a through-the-air laser, he developed a process by which one or the other would leap from rooftop to rooftop no matter the weather, resulting in the fastest connection available.

“When rain affects the millimeter wave, the laser stays up. When fog affects the laser, the millimeter wave doesn't care,” he says. “This is the endgame.”

LONG, STRANGE TRIP

Mr. Persico, 43, first deployed the technology in 2012 between servers in Aurora, Ill., owned by CME Group Inc., which operates the Chicago Mercantile Exchange and the Chicago Board of Trade, and those of InterContinentalExchange Group Inc. on Chicago's South Side. Since then, he has signed up some 30 firms willing to pay millions of dollars annually to gain an edge in the high-speed race to place buy and sell orders with financial exchanges.

(LPL's Casady: Let's keep perspective on high-frequency trading)

He's now working for his first exchange client, ICE's New York Stock Exchange, building a bridge between its data center in New Jersey and that of Nasdaq OMX Group Inc. Once it's up, NYSE will sell the link to trading firm clients.

Though Anova's transmission system is speedy, it requires clear sight lines and works best in short hops. Still, says customer Matt Haraburda, XR Trading president, “It's a very compelling technology from a reliability point of view.”

This is not the career Mr. Persico planned. With a marketing degree from Northern Illinois University, he wanted to write copy for Chicago advertising shop Leo Burnett, but when he couldn't land that job, he became a personal trainer, then a pipe-fitter and eventually a corporate librarian in what he calls the “fun arc” of his career.

The librarian job in the early 1990s gave him lots of time to play on a computer, leading to other tech jobs and eventually a top post at Tekom, a Chicago company that was building trading networks for Germany's Eurex. He bought out Tekom's owners in 2004 and sold it at a profit two years later.

Anova has invested more than $10 million in its technology, including creating equipment that doesn't sway in high winds. It employs two dozen people in its Illinois Center headquarters, and 45 altogether.

There's one business risk beyond Mr. Persico's control, however: a federal investigation into whether his high-frequency trading customers are violating insider trading laws.

(Lynne Marek is a reporter with sister publication Crain's Chicago Business)

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