diff --git a/CHANGELOG.md b/CHANGELOG.md
index 23e7ced49d..92968eeb94 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -144,7 +144,10 @@ The format is based on [Keep a Changelog](http://keepachangelog.com/en/1.0.0/).
 - Changed warnings and recommendations for dataloaders in `ddp_spawn` ([#6762](https://github.com/PyTorchLightning/pytorch-lightning/pull/6762/))
 
 
-- `pl.seed_everyting` will now also set the seed on the `DistributedSampler` ([#7024](https://github.com/PyTorchLightning/pytorch-lightning/pull/7024))
+- `pl.seed_everything` will now also set the seed on the `DistributedSampler` ([#7024](https://github.com/PyTorchLightning/pytorch-lightning/pull/7024))
+
+
+- Changed default setting for communication of multi-node training using `DDPShardedPlugin` ([#6937](https://github.com/PyTorchLightning/pytorch-lightning/pull/6937))
 
 
 ### Deprecated
diff --git a/pytorch_lightning/plugins/training_type/sharded.py b/pytorch_lightning/plugins/training_type/sharded.py
index 62404b66f8..fbcdb405a5 100644
--- a/pytorch_lightning/plugins/training_type/sharded.py
+++ b/pytorch_lightning/plugins/training_type/sharded.py
@@ -20,7 +20,7 @@ from pytorch_lightning.core.lightning import LightningModule
 from pytorch_lightning.core.optimizer import is_lightning_optimizer
 from pytorch_lightning.plugins.training_type.ddp import DDPPlugin
 from pytorch_lightning.trainer.states import TrainerState
-from pytorch_lightning.utilities import _FAIRSCALE_AVAILABLE, rank_zero_only
+from pytorch_lightning.utilities import _FAIRSCALE_AVAILABLE, _FAIRSCALE_OSS_FP16_BROADCAST_AVAILABLE, rank_zero_only
 
 if _FAIRSCALE_AVAILABLE:
     from fairscale.nn.data_parallel.sharded_ddp import ShardedDataParallel
@@ -32,10 +32,15 @@ if _FAIRSCALE_AVAILABLE:
 class DDPShardedPlugin(DDPPlugin):
     """ Optimizer and gradient sharded training provided by FairScale. """
 
+    _REDUCE_BUFFER_SIZE_DEFAULT = 2**23  # 8M
+
     def configure_ddp(self):
         self._wrap_optimizers()
         self._model = ShardedDataParallel(
-            LightningShardedDataParallel(self.model), sharded_optimizer=self.lightning_module.trainer.optimizers
+            LightningShardedDataParallel(self.model),
+            sharded_optimizer=self.lightning_module.trainer.optimizers,
+            # For multi-node training, enabling bucketing will improve performance.
+            reduce_buffer_size=self._REDUCE_BUFFER_SIZE_DEFAULT if self.num_nodes > 1 else 0,
         )
         setattr(self._model, "require_backward_grad_sync", False)
 
@@ -47,6 +52,12 @@ class DDPShardedPlugin(DDPPlugin):
             if not isinstance(optimizer, OSS):
                 optim_class = type(optimizer)
                 zero_optimizer = OSS(params=optimizer.param_groups, optim=optim_class, **optimizer.defaults)
+                if _FAIRSCALE_OSS_FP16_BROADCAST_AVAILABLE:
+                    is_fp16 = self.lightning_module.trainer.precision == 16
+                    # For multi-node training, compressing the model shards in fp16 before broadcasting
+                    # improves performance. When using PyTorch AMP, it will not degrade
+                    # the model performance.
+                    zero_optimizer.broadcast_fp16 = is_fp16 and self.num_nodes > 1
                 optimizers[x] = zero_optimizer
                 del optimizer
         trainer = self.lightning_module.trainer
@@ -58,7 +69,7 @@ class DDPShardedPlugin(DDPPlugin):
             return
         self._reinit_optimizers_with_oss()
 
-    def optimizer_state(self, optimizer: 'OSS') -> Optional[dict]:
+    def optimizer_state(self, optimizer: "OSS") -> Optional[dict]:
         if is_lightning_optimizer(optimizer):
             optimizer = optimizer._optimizer
         optimizer.consolidate_state_dict()
diff --git a/pytorch_lightning/utilities/__init__.py b/pytorch_lightning/utilities/__init__.py
index 3c1108b535..979e6d95dd 100644
--- a/pytorch_lightning/utilities/__init__.py
+++ b/pytorch_lightning/utilities/__init__.py
@@ -36,6 +36,7 @@ from pytorch_lightning.utilities.imports import (  # noqa: F401
     _DEEPSPEED_AVAILABLE,
     _FAIRSCALE_AVAILABLE,
     _FAIRSCALE_PIPE_AVAILABLE,
+    _FAIRSCALE_OSS_FP16_BROADCAST_AVAILABLE,
     _GROUP_AVAILABLE,
     _HOROVOD_AVAILABLE,
     _HYDRA_AVAILABLE,
diff --git a/pytorch_lightning/utilities/imports.py b/pytorch_lightning/utilities/imports.py
index 791cef7ff2..7b36c47285 100644
--- a/pytorch_lightning/utilities/imports.py
+++ b/pytorch_lightning/utilities/imports.py
@@ -75,6 +75,7 @@ _BOLTS_AVAILABLE = _module_available('pl_bolts')
 _DEEPSPEED_AVAILABLE = not _IS_WINDOWS and _module_available('deepspeed')
 _FAIRSCALE_AVAILABLE = _TORCH_GREATER_EQUAL_1_6 and not _IS_WINDOWS and _module_available('fairscale.nn')
 _FAIRSCALE_PIPE_AVAILABLE = _FAIRSCALE_AVAILABLE and _compare_version("fairscale", operator.le, "0.1.3")
+_FAIRSCALE_OSS_FP16_BROADCAST_AVAILABLE = _FAIRSCALE_AVAILABLE and _compare_version("fairscale", operator.ge, "0.3.3")
 _GROUP_AVAILABLE = not _IS_WINDOWS and _module_available('torch.distributed.group')
 _HOROVOD_AVAILABLE = _module_available("horovod.torch")
 _HYDRA_AVAILABLE = _module_available("hydra")