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> HFT guys pay very expensive colo rates to be in a datacenter that is milliseconds closer to wherever the time is stamped on a trade

Yes, but that doesn't constrain the location of the exchange. The exchange (and all of the HFT colos) could be in Texas and the trading floor in NYC. (There's no reason to do HFT from the trading floor.)

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Speed-of-light limitations say that yes, the best HFT will happen close to the trading floor.

EDIT: Okay, close to NYSE's datacenter, which is still in New York, I believe.

I believe their new datacenter is in New Jersey now. They still have a Manhatten Datacenter but that is not where the trades are matched.

> Speed-of-light limitations say that yes, the best HFT will happen close to the trading floor.

Why?

HFT needs to be close to where transactions happen, but that's not the trading floor.

The trading floor is just a place where a bunch of people with a bunch of screens connected to the "place where transactions happen" gather each trading period.

The trading floor can't be where transactions happen because it's got people in it, not machines.

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