Thursday, May 1, 2014

Flash Boys: A Wall Street Revolt

Flash Boys: a Wall Street Revolt
by Michael Lewis
W. W. Norton and Company, 2014.  271 pgs.  Nonfiction

Usually when Michael Lewis takes on Wall Street there are Bad Guys and Stupid Guys, but no Good Guys to speak of. In Flash Boys a young trader for the Royal Bank of Canada, Brad Katsuyama can't figure out why when he tries to make a trade for his clients, the market he sees on the screen disappears and the trade is negotiated at--usually--a higher price.  Enter the world of high-frequency trading where computers and fiber optics where traders can be in and out of the market so quickly they can affect pricing while you are just beginning the blink of an eye. In this world, any closer proximity to the markets that shaves milliseconds off your order arrival time puts you--or in this case--the big Wall Street banks and traders in a position to manipulate the markets to their advantage.  So has anything changed since the 2008 stock market implosion?  Not much, except everything is a) faster and b) more secretive (e.g., companies establishing and trading in "dark pools," exclusive trading sites that prevent their trades from being manipulated by the people they are manipulating. Katsuyama and his hand-picked team of geeks and honest brokers, decide they only way they can outmaneuver is to establish their own stock exchange. How they level the playing field and make sure that what you see on the screen is what you get is the substance of this brilliant, fascinating story of a light turned on at the end of the long dark tunnel that the stock market has become.  Some profanity, most of it richly deserved.


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