US stock market is rigged by high-speed traders, says Michael Lewis

Monday, March 31, 2014
By Paul Martin

Author of The Big Short says in his latest book that high-frequency trading is costing other investors billions of dollars
Monday 31 March

The US stock market is rigged in favour of high-speed electronic trading firms, which use their advantages to extract billions from investors, according to the acclaimed author Michael Lewis.

In his new book Flash Boys: A Wall Street Revolt, Lewis says that firms are using their speed advantage to profit at the expense of other market participants to the tune of tens of billions of dollars.

“They are able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price,” Lewis, whose book is available on Monday, said on the television program 60 Minutes on Sunday.

“This speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds,” said Lewis, whose books include The Big Short and Moneyball.

High-frequency trading (HFT) is a practice carried out by many banks and proprietary trading firms using sophisticated computer programs to send thousands of orders into the market in an instant, executing a small portion of them when opportunities arise to capitalise on price imbalances, or to make markets. HFT makes up more than half of all US trading volume.

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