Mick - yes the distance can make a difference. If you pony up enough cash then you can have your server in a room next to the ASX.
The serious players will spend millions on hardware and programming. From an IT point of view it's like warfare to these dudes, forever refining their system and code to get an extra millisecond of the transaction times.
It would not surprise me if some of the software was in assembler code, or even embedded as firmware chips.
