On a ‘Rigged’ Wall Street, Milliseconds Make All the Difference
“The stock market is rigged,” Michael Lewis tells Fresh Air’s Terry Gross. “It’s rigged for the benefit for really a handful of insiders. It’s rigged to … maximize the take of Wall Street, of banks, the exchanges and the high-frequency traders at the expense of ordinary investors.”
Lewis is the author of several books about the world of finance, including Liar’s Poker and The Big Short. His new book Flash Boys is about the form of computerized transactions known as high-frequency trading, in which the fastest computers with the highest connection speeds get the information first, and make the trade before anyone else can. A millisecond — even a nanosecond — can make all the difference between how much money is made or lost on any transaction.
You’d be surprised to hear what investment banks do to get that nanosecond edge, and how they often use it in ways Lewis describes as predatory. The victims range from some investment houses to individual investors. Lewis says high-frequency trades can end up hurting the returns on your retirement accounts. The FBI, Wall Street regulators and New York’s attorney general are investigating high-frequency trading, and whether it has created an uneven playing field.
More: On a ‘Rigged’ Wall Street, Milliseconds Make All the Difference : NPR