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Flash Boys
Flash Boys: A Wall Street Revolt is a book by the American writer Michael Lewis,[1] published by W. W. Norton & Company
Flash Boys: A Wall Street
on March 31, 2014. The book is a non-fiction investigation into the phenomenon of high-frequency trading (HFT) in the US equity
Revolt
market, with the author interviewing and collecting the experiences of several individuals working on Wall Street.”[2] Lewis
concludes that HFT is used as a method to front run orders placed by investors. He goes further to suggest that broad technological
changes and unethical trading practices have transformed the U.S. stock market from "the world's most public, most democratic,
financial market" into a "rigged" market.[3]

The book has drawn criticism from some academics and industry experts, particularly on Lewis's grasp of HFT and other factual
inaccuracies in its depiction of trading.[4][5][6] Other critics have praised Lewis's explanations of trading concepts and concurred
with his criticism of HFT; however, it is suggested that he neglects to pay attention to the larger issue of financial regulation, and
had excessively simplified the relationship between various institutions in the financial market.[4][7][8] A few executives in the
industry have also responded by dismissing the book's content as "closer to fiction".[9]

Contents
Synopsis
Critical response
Impact and aftermath
References Hardcover edition
External links Author Michael Lewis
Country United States
Language English
Synopsis
Subject High-frequency
The book centers on several people, including Sergey Aleynikov, a former programmer for Goldman Sachs, and Bradley trading
Katsuyama, the founder of IEX, the Investors' Exchange.[2][3][10][11]
Genre non-fiction
Publisher W. W. Norton &

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Flash Boys starts out describing a $300 million project from Spread Networks - the construction of an 827-mile (1,331 km) cable Company
that cuts straight through mountains and rivers from Chicago to New Jersey - with the sole goal of reducing the transmission time Publication March 31, 2014
for data from 17 to 13 milliseconds.[12] date
Media type Print, e-book
The book takes a look at how electronic trading replaced the trading floor of screaming brokers, slamming telephones and hysteria-
inducing ticker tape, and how that change impacted the market.[13] The speed of data is a major theme in the book; the faster the Pages 288 pp.
data travels, the better the price of the trade. Lewis claims access to this fiber optic cable, as well as other technologies, presents an ISBN 9780393244663
opportunity for the market to be controlled even more by the big Wall Street institutions. To counter this disadvantage to investors, Preceded by Boomerang
Katsuyama bands together a team that sets out to develop a new exchange, called IEX, to make the playing field for trading
fairer.[14]

A chapter goes into detail about Sergey Aleynikov, the former Goldman Sachs programmer convicted of stealing the bank's high-frequency trading code and how Goldman
actually called the FBI and then educated the FBI on that code.[15][16]

The book concludes by observing that there is now a conventional (microwave) link between Chicago and New Jersey, which follows an even straighter route than the Spread
Networks' 827-mile cable (as microwaves always follow a direct path, whereas cables, by their very nature, must, at least occasionally, detour around physical barriers). The
new route also takes advantage of the faster speed of signal travel that is possible through air (compared to signal travel speed through glass fibers, which slows light down).
With these two advantages, this new link shaved 4.5 milliseconds off the Spread Networks speed, thereby rendering it obsolete.

Critical response
Manoj Narang, CEO of high-frequency trading firm Tradeworx, argued that Lewis' book is more "fiction than fact," claiming Lewis needs a primer in HFT.[9] A review by
academic blogger Scott Locklin notes that Lewis had never spoken to, nor cited, a single high-frequency trader in the book.[17] Andrew Ross, writing in The Guardian, praised
the book as an "effective exposé" but criticizes the author for arguing for the "heroism" of one group of financial insiders over another.[8] A month later, an article in The
Economist noted that Lewis's book had generated "vigorous criticism", but that there may be some merits in its liquidity concerns.[6]

A Financial Post reviewer suggested that Lewis intentionally omitted details that point to market-stabilizing benefits of HFT: "Ironically, the Flash Crash itself was just glossed
over. Could that be because the primary cause of that momentary blip lay in a confluence of regulatory mistakes and that it was many of the demonized HFTs who actually
stood fast throughout and thereby insured that the damage was a fraction of what it could have been had only the shell-shocked, traditional participants been left to
respond?"[18]

An Oxford University Press handbook chapter authored by Andreas Fleckner calls Flash Boys a readable and mostly accurate introduction into such topics as dark pools,
front-running, or kickbacks. The article however suggests that on-site trading practices are, nonetheless, too technical for laymen, market observers, or even regulators to fully
understand. The author recommends providing incentives for self-regulation rather than SEC regulation.[5]

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Felix Salmon, a financial columnist for Slate Magazine, asserted that the negative impact of high-frequency trading is restricted to "very rich" financial intermediaries, such as
hedge funds. He notes that Lewis's story "needs victims" and that he portrays several billionaire characters as victims "by pulling out every rhetorical device he can muster." [7]
In a crucial part of the book's narrative, a mutual fund manager named Rich Gates was "shocked" to find out he was paying 0.04% per trade due to his fund's dependence on a
HFT front.[7] The reviewer noted that Gates' own mutual fund charged an average of 2.41% for "expenses" to retail investors.[7]

Impact and aftermath

The book reached No. 1 on The New York Times Best Seller list, overtaking Capital in the Twenty-First Century, and remained on the top for three weeks.[19]

Jonathan Weil at Bloomberg suggests that Federal Bureau of Investigation's investigation into high frequency trading, a day after the book's release, was directly motivated by
the book's claims.[20][21]

Lewis's phrase "The market is rigged" was often referenced.[22] The chairwoman of the Securities and Exchange Commission (SEC), Mary Jo White, stated in Congressional
testimony on April 29, 2014, that U.S. financial markets "are not rigged" in response to a direct question on claims in Lewis's book.[23]

Former New York City mayor Michael Bloomberg disputed claims made in Lewis’ book on May 2, 2014, stating in a CNBC interview that "the system isn’t rigged."[24] Arthur
Levitt, adviser to high-frequency firm KCG Holdings and former SEC chairman, commented that variation exists within the group of high-speed traders that Lewis’ book
describes, saying "What is missed in the book and in the general discussion of HFT is there are some HFT traders who respect the sanctity of the investor, and some who
don’t."[25]

On May 1, 2014, the New York Stock Exchange and two affiliated exchanges agreed to pay $4.5 million as a settlement for related investigations by the SEC.[26] The SEC noted
a number of procedural violations, an improper use of an error account, and operating a block trading platform that did not comply to NYSE/SEC rules. The NYSE also agreed
to find an independent consultant to review its procedures and policies. This was the second-ever SEC financial penalty to be levied at a stock exchange; the first penalty was
handed out in 2012. Some writers suggest that the release of popular works such as Flash Boys contributed to these decisions. The charges are unrelated to high-frequency
trading.[26]

References
1. "Michael Lewis author page" (http://authors.simonandschuster.com/Michael-Lewi
s/4349). Simon & Schuster. Retrieved February 22, 2015.
2. Massoudi, Arash; Tracy Alloway (March 28, 2014). " 'Flash Boys' starts Wall St
soul searching" (http://www.ft.com/cms/s/0/6f514f02-b684-11e3-b230-00144feab
dc0.html#axzz2xUy8USU5). Financial Times. Retrieved March 31, 2014.
3. "Michael Lewis 60 Minutes Interview on HFT [VIDEO]" (http://www.valuewalk.co
m/2014/03/michael-lewis-60-minutes/). Value Walk. Retrieved March 31, 2014.
4. Smith, Noah (April 15, 2014). "Book Review: Flash Boys" (http://noahpinionblog.b
logspot.com/2014/04/book-review-flash-boys.html). Retrieved April 19, 2017.
5. Fleckner, Andreas Martin (April 23, 2015). "Section 4 and Footnote 56,
Regulating Trading Practices, The Oxford Handbook of Financial Regulation".
Oxford University Press. SSRN 2476950 (https://ssrn.com/abstract=2476950).
6. Buttonwood (May 7, 2014). "HFT: the backlash continues" (https://www.economis
t.com/blogs/buttonwood/2014/05/markets). The Economist.
7. Salmon, Felix (April 7, 2014). "The Lewis Effect". Slate Magazine.

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8. Ross, Andrew (May 16, 2014). "Flash Boys by Michael Lewis – review" (https://w
ww.theguardian.com/books/2014/may/16/flash-boys-michael-lewis-review). The
Guardian. Retrieved June 26, 2014.
9. Narang, Manoj (April 4, 2014). "A Much-Needed HFT Primer for 'Flash Boys'
Author Michael Lewis" (http://www.institutionalinvestor.com/Article/3328158/Bank
ing-and-Capital-Markets-Trading-and-Technology/A-Much-Needed-HFT-Primer-f
or-Flash-Boys-Author-Michael-Lewis.html#.U6ygpI1dWJg). Institutional Investor.
Retrieved June 26, 2014.
10. "Former Goldman Programmer Gets 8-year Jail Term for Code Theft" (https://dea
lbook.nytimes.com/2011/03/18/ex-goldman-programmer-sentenced-to-8-years-fo
r-theft-of-trading-code/?_r=0). The New York Times. March 18, 2011.
11. Michael Lewis (September 2013). "Michael Lewis: Did Goldman Sachs Overstep
in Criminally Charging Its Ex-Programmer?" (http://www.vanityfair.com/news/201
3/09/michael-lewis-goldman-sachs-programmer). Vanity Fair. Retrieved June 18,
2018.
12. "High-frequency trading: when milliseconds mean millions" (https://www.telegrap
h.co.uk/finance/newsbysector/banksandfinance/10736960/High-frequency-tradin
g-when-milliseconds-mean-millions.html). The Telegraph. April 2, 2014. "In his
new book Flash Boys, author Michael Lewis looks at the extraordinary lengths
high-frequency traders go to to beat the competition"
13. Maslin, Janet (March 31, 2014). "Hobbling Wall Street Cowboys" (https://www.nyt
imes.com/2014/04/01/books/flash-boys-by-michael-lewis-a-tale-of-high-speed-tra
ding.html?_r=0). The New York Times. Retrieved June 26, 2014.
14. Gapper, John. " 'Flash Boys' by Michael Lewis" (http://www.ft.com/intl/cms/s/2/29
96a228-b9a4-11e3-957a-00144feabdc0.html#axzz35mqzT1ua). 21 March 2014.
Financial Times. Retrieved June 26, 2014.
15. Brown, Tom (May 1, 2015). "Split verdict for Sergey Aleynikov ends a tumultuous
trial but leaves open the chance the yearslong saga could continue" (https://www.
reuters.com/article/2015/05/01/us-goldman-sachs-aleynikov-verdict-idUSKBN0N
M43V20150501). Reuters. Retrieved June 18, 2018.
16. Matthews, Christopher M. (May 1, 2015). "Ex-Goldman Programmer Guilty of
Stealing Code: Split verdict for Sergey Aleynikov ends a tumultuous trial but
leaves open the chance the years long saga could continue" (https://www.wsj.co
m/articles/jury-gives-split-verdict-in-trial-of-former-goldman-programmer-sergey-a
leynikov-1430496291). The Wall Street Journal. Retrieved June 18, 2018.
https://en.wikipedia.org/wiki/Flash_Boys
Flash Boys - Wikipedia
17. Locklin, Scott (April 4, 2014). "Michael Lewis: shilling for the buyside" (http://scottl
ocklin.wordpress.com/2014/04/04/michael-lewis-shilling-for-the-buyside/). Scott
Locklin. Retrieved June 26, 2014.
18. Bandeen, Ian (May 29, 2014). "Flash ... or Fiction? Hit book on high-frequency
trading lets the real villains off the hook" (http://business.financialpost.com/2014/
05/29/flash-or-fiction-hit-book-on-high-frequency-trading-lets-the-real-villains-off-t
he-hook/). Financial Post. Retrieved June 26, 2014.
19. "Best Sellers, Hardcover Non-fiction" (https://www.nytimes.com/best-sellers-book
s/2014-04-20/hardcover-nonfiction/list.html). The New York Times. April 20,
2014. Retrieved November 1, 2014.
20. Weil, Jonathan (April 1, 2014). "Weil on Finance: FBI Hops on Michael Lewis
Bandwagon" (http://www.bloombergview.com/articles/2014-04-01/weil-on-finance
-fbi-hops-on-michael-lewis-bandwagon). Bloomberg News. Retrieved April 1,
2014.
21. Bradford, Harry (April 1, 2014). "FBI Investigating High-Frequency Traders: WSJ"
(http://www.huffingtonpost.com/2014/03/31/fbi-high-speed-trading_n_5065622.ht
ml). Huffington Post. Retrieved April 1, 2014.
22. Rubenstein, Ari (April 30, 2014). "Thank you, Michael Lewis" (https://www.cnbc.c
om/id/101628594). CNBC. Retrieved May 1, 2014.
23. Bartash, Jeffry (April 29, 2014). "U.S. markets 'not rigged,' SEC boss says, White
downplays 'flash boy' charges in new Michael Lewis book" (http://www.marketwat
ch.com/story/us-markets-not-rigged-sec-boss-says-2014-04-29). MarketWatch.
Dow Jones. Retrieved May 1, 2014.
24. "System isn't 'Rigged'-Bloomberg defends HFT" (https://www.cnbc.com/id/10163
5189). CNBC. CNBC.com. May 2, 2014. Retrieved June 16, 2014.
25. Mamudi, Sam (April 1, 2014). "Not Every High-Frequency Trader Is Predatory,
Levitt Says" (https://www.bloomberg.com/news/2014-04-01/not-every-high-frequ
ency-trader-is-predatory-arthur-levitt-says.html). Bloomberg News. Retrieved
October 30, 2014.
26. McGrath, Maggie (May 1, 2014). "SEC Fines New York Stock Exchange $4.5
Million For Failure To Comply With Exchange Rules" (https://www.forbes.com/site
s/maggiemcgrath/2014/05/01/sec-fines-new-york-stock-exchange-4-5-million-for-
failure-to-comply-with-exchange-rules). Forbes. Retrieved April 19, 2017.
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External links
W.W. Norton (http://books.wwnorton.com/books/Flash-Boys/), Flash Boys official site
IEX website (http://www.iextrading.com/about/)
Fernandez, Robert (2013). "High Frequency Trading and the Risk Monitoring of Automated Trading". SSRN 2285407 (https://ssrn.com/abstract=2285407).
"The great debate: Combating HFTs image" (http://video.cnbc.com/gallery/?video=3000263252), CNBC video (23:09) with Brad Katsuyama (IEX), Michael Lewis, and
William O'Brien (BATS), April 1, 2014
Judy Woodruff (April 4, 2014). "In 'Flash Boys,' a story of Wall Street reform from within: Interview with Michael Lewis" (https://www.pbs.org/newshour/bb/high-frequency-t
raders-anticipate-wall-street-faster/). PBS Newshour. Retrieved April 8, 2014.

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