Flash Boys
by: Michael Lewis
Central Theme:
Acting in your own interest can create a solution that helps many others.
Recommendation:
Michael Lewis’ “Flash Boys” dives into the little known but increasingly relevant world of High Frequency Trading. He demonstrates how the proliferation of technology has changed the stock market, and shows that this could lead to more control over the market for large Wall Street firms.
Summary:
Timing is everything: this is true in life, and truer on Wall Street. This because especially clear in 2010, when Spread Networks unveiled a $300 million cable project designed to shave just 4 milliseconds off of transmission time between the Chicago Mercantile Exchange to the Nasdaq. High Frequency Traders (HFTs) competed vigorously for access to this line, as faster speeds means better prices on trades. In turn, this created a disadvantage for investors who either don’t know about or have access to these fast lines. Enter Brad Katsuyama, an RBC manager who realized that larger institutional trades were being front-run by these HFTs and set out to even the playing field.
