Book Review: “Flash Boys: A Wall Street Revolt” by Michael Lewis

Michael Lewis has another enlightening book written with great skill such that the readers would be interested enough to keep reading about this esoteric working of the stock exchange.

Key Points:
– The Stock market is rigged. This 60-minutes segment has a good coverage.
– This book is about a journey of how Brad Katsuyama and others discovered how their trades are being front-run and manipulated and found the HFT gets ahead of people’s trades (front-running).
– Milli-seconds and micro-seconds make a huge difference: Microwave towers and fiber optics cable were used to speed up trades ahead of others.
– Spread Network builds and leases the network to the HFT for millions.
– Thor – started by Brad to synchronize the trades at all exchanges so the order arrive at all exchanges at the same time to avoid HFT.
– Flash crash can be attributed to HFT. More flash crashes will happen.
– Dark pool: dark allies to feed the customers’ trades to the HFT sharks.
– Irony: Goldman Sachs uses IEX.
– Heroes of the story: Brad Katsuyama from RBC and his new IEX. Other characters including Ronan Ryan. Michael Lewis makes them come alive and interesting.

My takeaways:
– Wall street folks are greedy driven by profit and bonus. It’s biggest casino where the rich guys play the “house.”
– Angry how they use their talents to legally con people.
Role of technology and speed play either side of the roles – faster computers, please.
– IEX works by slowing down the HFT by 350us and speed up the SIP.
– Serge Aleynikov’s “stealing” the code and getting years of jail sentence.
– Why Russian programmers are fit for HFT, because they have lived in a country where working around the system is a way of life for generations.
– Programmers should go to Wall Street to maximize their pay.
– I don’t think I’ll be able to trust the Wall Street again. Too many incentives to rig the system for their own benefit.
– eBook reads like a fiction, and flows well. Makes you care about the characters and good use of metaphors and close-up description of 9/11 event.