Michael Lewis's expose of high frequency trading, Flash Boys
, has already been mentioned
on the blue, but, unusually for a work of non-fiction it ends with a cliffhanger. At the end of the book, Lewis stares up at a microwave tower in central Pennsylvania that had created a new, faster link between financial markets in Chicago and the East Coast: "I noticed, before we left, a metal plate attached to the fence around the tower
. On it was a Federal Communications Commission license number: 1215095. The number, along with an Internet connection, was enough to lead an inquisitive person to the story behind the tower. The application to use the tower to send a microwave signal had been filed in July 2012, and it had been filed by . . . well, it isn’t possible to keep any of this secret anymore. A day’s journey in cyberspace would lead anyone who wished to know it into another incredible but true Wall Street story, of hypocrisy and secrecy and the endless quest by human beings to gain a certain edge in an uncertain world. All that one needed to discover the truth about the tower was the desire to know it.” Now we know that truth
The book has caused a stir, leading to SEC investigations
. The main hero of the book, Brad Katsuyama, and one of the main villains, the CEO of the BATS Exchange, recently yelled at each other for 20 minutes on CNBC in a fascinating exchange
(transcript on the side).
Some insiders are dismissing the impact of HFT, since, for the average investor, HFT "cheating" amounts to less than $.50 per $10,000 traded
. Though even defenders of HFT worry about market stability
If you are just interested in the mystery of the infrastructure of the microwave towers, Gizmodo has you covered.