So the book is an absolute mininum? I spot an d speak about this BS long time ago, stock777 did same, Bright brothers write about it in magazines, some other folks (who is a lot bigger than me)did same, themis guys i believe explain the problem years ago on front of a senate committee, nanex, flash crash. How much do you really need? All of a sudden a book from someone who is not even from this industry and bamm! Everyone jumps on HFT. Investigations, blah blah blah..just ban the fucking subpenny. For 1001 time. That would be a nice first step.
At least the new microcap pilot program will banish sub-pennying for one portion of the test. http://www.reuters.com/article/2014/06/25/sec-pilotprogram-trading-idUSL4N0P61HV20140625 In another positive development, politicians appear to be taking an interest now: http://www.tradersmagazine.com/news...yment-for-order-flow-levin-says-112678-1.html (The lion's share of "sub pennying" is wholesaler payment-for-order-flow -- so that the broker and the "wholesaler" can say they gave the retail customer "price improvement" of $.01 per 100 share trade, while bilking said customer out of potentially $1 -- or far more -- per the same trade.)
Lewis is a great rabble rouser and has a main street audience. The others you wouldn't even have heard of unless you were in the industry already. I think there are too many entrenched interests, so you really needed the fear mongering on main street to kickstart the government action.
As I've point out long time ago-they care less about hft. Cause its not their money. And this is why whole thing about hft or current market state (constant up trend on miserable volume) can go pretty much forever. Welcome to new trading..low volume, huge spreads, sometimes(!) No participants at all on bid or ask...who cares? Money managers at pension plan can always raise their fees , blaming market conditiond or use liquid etfs . No worries..
I think hedge and mutual funds do care about HFT because cutting transaction costs increases their pay. I am not sure if this is right place to post this. I think Katsuyama's IEX is working because the front running type HFT stategies can't just be turned on blindly. I think GS figured out how to some times route through IEX and sometimes not so that MS close connections to HFTs with precentage going to MS had a very bad propietary trading quarter and GS had huge profits. I have been routing order to IEX on IB for my infrequent stock trades. Prices stay mostly symmetrical no matter if I buy or sell and bounce around some - saves maybe 5 cents on an under 10 stock (MTG) that is 1/2%. Best part is I can get some kind of feel for supply/demand again.
I just read half of Flash Boys and can't believe how boring pointless and wrong it is. Lewis never asks how it was possible to make $2M/year as a trader for a third tier Wall St firm. Anything that eliminates that job can't be all bad. On the other side, he never quantifies how much money is made by these HFTs. Sure, if the HFTs scored on every trade, it would be big. But they don't. They win a few and lose a few. Where are the HFT billionaires? But overall it's just a bad book. Unless you're an insider and expert, it's way too complicated to figure out, and Lewis doesn't help. Even the experts are missing many pieces of he puzzle. But the big picture view is that front running has always existed, now it's just faster and less lucrative. For any ordinary trader or buy and hold index investor, it doesn't matter in the slightest.
This is bizarre. Did any of these people read the book? Flash Boys got a 4.4 amaozn rating and Liars Poker received 4.3.
Well, Virtu was aiming for a $3B valuation before the IPO got sidetracked. Anyway, I think without the Lewis book, IEX probably isn't as successful and SEC enforcement would probably still be in a much lower gear.. and I think many exchanges already rolled back some HFT-friendly order types and practices that clearly disadvantaged normal traders.
It's hard to imagine a topic less interesting than the success or failure of a new stock market exchange.