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High Speed Trading Needs A Different Message

April 2, 2014

Watching CNBC yesterday I was embarrassed for Bats’ CEO William O’Brien. He came across as paranoid, rude, a bully, and not very smart. Few people outside his building know who he is and yet he felt he had the credibility to call Flash Boys author Michael Lewis a liar and throwing down a ‘shame on you’ for scaring investors. Lewis was holding all the cards He was on 60 Minutes, NPR Fresh Air, his book will surely be a best seller, and the FBI had that day announced that it was investigating high speed trading. Moreover, unlike the complex mortgage fiasco that Lewis previously covered, high speed trading is a fairly simple cheat that Main Street will be able to easily understand. In his opening chapter, Lewis describes the secretive laying of fiber optic cable between Chicago and New York so that high speed traders could have faster access to future’s data than anyone else. He goes on the describe the disruptions from flash crashes connecting profits that some high speed traders make while providing little to no value to economies with the risks that they introduce.

Lewis later commented that Wall Street is scared of press coverage. Under pressure from technology the middle-men of Wall Street have less value so turn to solutions like high speed trading that cheat the system and don’t provide much value. O’Brien gave Lewis a huge gift by demonstrating with his big mouth that Wall Street doesn’t tolerate critics.

 

View – CNBC coverage

 

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