Flash Boys: A Wall Street Revolt

Review

Flash Boys: A Wall Street Revolt is a book by the American writer Michael Lewis in 2014. By interviewing and collecting the experiences of several individuals working on Wall Street, Lewis concludes that HFT is used as a method to front run orders placed by investors and he further suggests that broad technological changes and unethical trading practices have transformed the U.S. stock market from public and democratic into a "rigged" market.

In the article “the Original Flash Boys” in 2015, Payden and Rygel disagree on Lewis’ opinion. They investigate from a historical perspective to provide a deep appreciation for high frequency traders and those who have used the best technology to make the financial market run more efficiently. Payden and Rygel discuss five case studies from 480 BCE to 1990 to demonstrate that the controversy surrounding high-frequency trading share important similarities with their predecessors. As communication technology aid advances, arbitrageurs are just figuring out different ways to make a quick profit.

From my personal perspective, it is true that HFT practices are unfair to small investors since they lack the resource to do so, but HFT provides liquidity at a reduced cost and contributes to market efficiency. Without HFT, investors may be less satisfied with the prices they get in their trades due to larger bid/ask spreads. However, more intense scrutiny and policing of HFT would be better considering the opportunities of misuse in HFT.

Work Cited

Payden and Rygel. “The Original Flash Boys.” Payden and Rygel Point of View, 2015. https://www.payden.com/library/pov/Q12015c.pdf. Accessed 21 February 2018.