04-07-2014, 10:16 AM
Michael Lewis' new book Flash Boys has been getting a TON of media coverage lately and has spawned lots of discussion about whether the market is rigged and rife with fraud. His message is clearly appealing, especially to a public that has been burned so many times recently by Wall St.
This review in Slate, however, makes a compelling case that Lewis' book is way off base and needlessly inflammatory. The article explains that high frequency trading, while easy to demonize, is actually part of the evolution of the markets to greater liquidity and significantly reduced costs. Moreover, if the costs associated with high frequency trading can be characterized in a negative light, those costs pale in comparison to much more mundane evils such as high expense ratios and management fees.
Interesting stuff to think about, at any rate.
This review in Slate, however, makes a compelling case that Lewis' book is way off base and needlessly inflammatory. The article explains that high frequency trading, while easy to demonize, is actually part of the evolution of the markets to greater liquidity and significantly reduced costs. Moreover, if the costs associated with high frequency trading can be characterized in a negative light, those costs pale in comparison to much more mundane evils such as high expense ratios and management fees.
Interesting stuff to think about, at any rate.