Wall Street Underground Fiber Race | Generated by AI

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Question: Which company on Wall Street submitted requests to dig holes or use water pumps in roads for the purpose of laying fiber optic cables underground to increase trading speed, and which major firms were involved in or aware of this kind of infrastructure?

Answer:

This is a fascinating story that sits at the intersection of Wall Street, technology, and infrastructure. You are describing the world of High-Frequency Trading (HFT) and the underground fiber cable race. Here is a comprehensive breakdown:

The Core Company: Spread Networks

The most famous example is Spread Networks, a telecom company founded by Dan Spivey and backed by James L. Barksdale (former CEO of Netscape). Spread Networks claimed to offer Internet connectivity between Chicago and New York City at ultra-low latency using dark fiber. Its customers were primarily firms engaged in high-frequency trading, where small reductions in latency are critical to closing trades before competitors.

The first cable line ran 827 miles from Chicago (home to the Chicago Mercantile Exchange) to Carteret, New Jersey (home to the Nasdaq data center), and was laid at a cost of US$300 million, unveiled in June 2010.

The achievement cut the round-trip signal time from 16 milliseconds to 13 milliseconds — a reduction of just 0.003 seconds — and was part of what analysts described as a technology arms race in financial trading.

The Trench-Digging Company: Hudson Fiber Network

Closer to what you are describing — the actual digging of trenches and roads — is Hudson Fiber Network (HFN). Seeing that the fiber routes between the New Jersey exchanges were often less than ideal, a telecom broker named Ronan Ryan prodded a company called Hudson Fiber into finding straighter ones. Hudson Fiber was doing a thriving business digging trenches in locations that required navigating complex urban infrastructure.

Hudson Fiber Network, established in 2002 and headquartered in Paramus, New Jersey, became a premier data transport provider offering high-bandwidth, low-latency networking solutions specifically for financial customers, with fully owned and operated fiber networks between key U.S. metropolitan markets.

Why Digging Roads Was Necessary

Installing fiber often meant disrupting local infrastructure — digging up streets or hanging cables on pre-existing structures — because running fiber is not practical in an urban environment without such intervention.

The goal was always the same: the shorter and straighter the cable route, the faster the signal. Even a few extra yards of fiber added latency. One trader called to complain that his fiber-optic cable was a few yards longer than it needed to be — such was the obsession with minimizing distance.

Which Big Wall Street Firms Used This Infrastructure?

The primary users were not megabanks like JPMorgan directly laying cable — they were the HFT firms and prop trading shops that paid to use these networks. The big banks — Goldman Sachs, Credit Suisse — were known clients, along with hedge funds and prop shops like Citadel, Getco, Hudson River Trading, Eagle Seven, Simplex Investments, Evolution Financial Technologies, DRW, and Cooperfund.

The first 200 companies that signed up to use Spread Networks’ tunnel paid a combined $2.8 billion to access it — so they could process large transactions faster than the market could react.

Goldman Sachs was one of HFT’s early adopters, and the NYSE, Nasdaq, and BATS exchanges offered incentive pricing for high-speed traders — the more you paid, the faster you could trade.

The “New Jersey Triangle” — Today’s Infrastructure

Telecom operators have built ultra-low-latency fiber loops dubbed the “New Jersey Triangle” connecting the Mahwah, Secaucus, and Carteret exchange data centers. Carriers like Zayo and Transaction Network Services (TNS) have invested in high-speed links between Manhattan and these New Jersey sites to meet demand from traders.

What Came After Fiber: Microwaves and Hollow-Core Fiber

Within a few years after Spread Networks’ cable opened, it was superseded by microwave networks that reduced transmission times along the Chicago-New York route to less than 9 milliseconds. HFT firms then began using lasers to zip data between NYSE and Nasdaq data centers, and later embedded algorithms in superfast computer chips.

The latest innovation is hollow-core fiber — an experimental type of cable that is empty inside, with dozens of parallel air-filled channels narrower than a human hair. Because light travels nearly 50% faster through air than glass, it takes about one-third less time to send data through hollow-core fiber compared to standard fiber.

This entire story was made famous by Michael Lewis’s book Flash Boys (2014) and the film The Hummingbird Project (2018), which depicted two cousins who quit their trading jobs to build a high-speed cable tunnel from Kansas to Wall Street, digging underground through rivers and mountains, funded by a big-time Wall Street trader.

In summary: The company most directly involved in physically digging roads and laying underground cable was Hudson Fiber Network, working at the behest of HFT firms. Spread Networks built the most famous long-haul underground route (Chicago to New Jersey). The clients were secretive HFT prop shops and major banks/funds including Goldman Sachs, Citadel, GETCO, DRW, and many others.

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