Has it been a year already?
In an article that is two parts retrospective and one part victory lap, Vanity Fair columnist Michael Lewis looks at the impact “Flash Boys” has had on the trading floor. High-frequency trading, IEX and algorithms were not household words before April, 2014 and they might not be on the lips of average Americans, but they did fuel Lewis blockbuster.
After all, its not every day that a book launches attorney general investigations, inspires an exchange president to meltdown on cable news and spur Americans to buy a book that features an obscure trader from the Royal Bank of Canada to figure out why the price of his trades were increasing the instant he placed his order.
Check out Traders ocverage of Michael Lewis’ “Flash Boys.”
Flash Boys is, of course, not a perfect book. Lewis does not visit an HFT execution firm or even a hedge fund that uses HFT during his research. Sure, theyre not exactly the chattiest people but more than a few will talk to the media. Traders spoke with Manoj Narang of Tradeworx and Mark Gorton of Tower Research for their passionate defenses of HFT. Also, Lewis pads his book with a Russian programmer who is accused of stealing code from Goldman Sachs and was subsequently arrested. This sad tale of intellectual property overreach doesnt fit the HFT is gaming the market argument of his book but hey, word counts must be obeyed.
So, who are these IEX guys and what are they doing for the buyide? Traders spoke wtih them before Michael Lewis did.
That said, Lewis is a vivid writer and he does add a pulse to what could easily be a deadly dull story. Likewise, his Vanity Fair article contains this classic scene from his famous confrontation with then BATS president William O’Brien:
Then came an unfortunate episode on CNBC, during which Brad Katsuyama was verbally assaulted by the president of the BATS exchange, who wanted the audience to believe that Katsuyama had dug up dirt on the other stock exchanges simply to promote his own, and that he should feel ashamed. He hollered and ranted and waved and in general made such an unusual public display of his inner life that half of Wall Street came to a halt, transfixed. I was told by a CNBC producer that it was the most watched segment in the channels history, and while I have no idea if thats true, or how anyone would even know, it might as well be. A boss on the Goldman Sachs trading floor told me the place stopped dead to watch it. An older guy next to him pointed to the TV screen and asked, So the angry guy, is it true we own a piece of his exchange? (Goldman Sachs indeed owned a piece of the BATS exchange.) And the little guy, we dont own a piece of his exchange? (Goldman Sachs does not own a piece of IEX.) The old guy thought about it a minute, then said, Were f—ed.
Read it yourself. This anecdote might be part of a tale that we suspect Lewis is aching to tell — an inside history of Goldman Sachs and the modern markets that very people seem to understand as they become unfathomably wealthy.
Now that will be a blockbuster.
