Following up on the topic of The Future Of Exchanges (see here, here, here) Alea posts an interesting Wall Street Journal article on algo trading and the importance of location. Also at Infoproc here.

About four years ago, Dave Cummings moved his trading firm's computers from a storefront in this Kansas City suburb to buildings in New York and New Jersey that house central computers for two big electronic stock exchanges.

The move shaved a precious fraction of a second from the time it takes Mr. Cummings's firm, Tradebot Systems Inc., to buy or sell a stock on computer-based exchanges like Archipelago. It now takes Tradebot about 1/1000 of a second to trade a stock, compared with 20/1000 before the move -- a difference of about the time it takes a computer signal to zip at nearly the speed of light from Kansas City to New York and back.

Regulatory question: is it feasible to impose a given delay, so as not to disadvantage traders in Kansas, 20 milliseconds away at light-speed, compared to New Yorkers only two milliseconds away? I doubt it. It would be possible to make sure that, say, Chicago and London got the quotes at the same time as New York, by delaying release by a few milliseconds in NY. But what about traders in Canada? Los Angeles? Butte, Montana? Ensuring that every city released data simultaneously would be a huge problem. So it looks like location is still important. Can't change the laws of physics, and all that.
On the other hand, at least your traders no longer need to live in London or NY - just the algorithms. You can put your traders in Bombay or Chengdu if you want, given that they aren't going to be trading, but just overseeing the algorithms - they don't need microsecond latency, just a big fat pipe to the algo server in a rack in Manhattan or wherever.

On a lighter note: a memo from Alan Greenspan to his puppy.

Although you initially had numerous problems with excessive liquidity, you have done an impressive job of developing internal controls, as well as external communications to provide others enough warning to take preventive action... There is, however, one aspect of your behavior that does portend some trouble, and that is your continuing irrational exuberance...