The 7,800km Asia Submarine-cable Express (ASE) connects Japan, Malaysia, Singapore and the Philippines. This is a high-speed undersea data cable which transfers data via an optical fibre system at 40 gigabits per second, and is three milliseconds faster than any other cable between Tokyo and Singapore.
So-called “high-frequency trades”, controlled by computers, involve making what may be hundreds of thousands of transactions in less than a second – all determined by a program that tracks market conditions. Even though the increase in speed may not sound significant, it could prove critical to financial trades made out of the region.
With banks and hedge funds competing against each other, the size of the profit or loss can come down to a matter of beating the competition by a fraction of a second, according to Ralph Silva, a strategist at Silva Research Network.
“High frequency trading is basically computer trading – you program a set of rules and as events happen – the computer decides buy or sell commands,” he said.
“As all incoming data is received by all banks at the same time, and because the computers are all the same with the same speed of processors, the length of time the command takes to get to the exchange makes a big difference.”
“So if all banks come to the same trading decision at the same time, the one to get the transaction to the master computer first wins.”
The data transfer capacity of 40Gbps is the equivalent of downloading a high-resolution DVD in about two seconds. Due to the decision to make the cable as straight as possible, the time to get information from one end to the other was reduced to 65 milliseconds.
Hiroyuki Matsumoto of NTT, one of the four partners involved in the project, stated that the area around Taiwan was avoided as earthquakes in this area are common. A route near the Philippines was chosen instead making the cable safer and more reliable.