Written by 00:00 Bookclub, Linkinbio

Flash Boys, a Wall Street Revolt

In Michael Lewis’s #1 New York Times Bestseller a small group of Wall Street iconoclasts realize that the U.S. stock market has been rigged for the benefit of insiders.

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I’ve never been interested in finance. To me it appeared as a world in itself with its own rules, its own jargon, its own stars and stories. When my colleague at work told me about a great book touching on high frequency trading, I wasn’t particularly enthusiastic to read it. Nevertheless I gave it a go. I didn’t regret it.

New York Stock Exchange, the world’s largest stock exchange by market capitalization

First of all I discovered how naive I was about the whole topic of trading. For me, when thinking about trading I thought of those screaming men, wearing colorful jackets with a phone in each hand. I had in mind the picture of these chaotic trading floors at the end of last century. Well, a lot has changed since then. Most of the trading is no longer happening on that iconic place on Wall Street anymore. I also learnt new terms like flash crashes, dark pools, etc.  And I heard from the first time something about Spread Networks. 

A mysterious project

Well, imagine for a couple of minutes that you are a farmer somewhere in Indiana or Ohio. We are in 2009, and the country is going through the first economic crisis of the millennium. One day, you have a business man ringing at your door and asking whether it would be possible to bury some fiber glasses under your field. You accept, because they pay well. Then you are intrigued because it appears that the work is mainly taking place at night, with a lot of secrecy around it. Besides, instead of crossing your field from north to south, or west to east, they kind of dig it from south-east to north-west, not following any grid. You even heard from some neighbors that this mysterious fiber glass line did cross rivers in diagonal. What is this all about? 

Every millisecond counts

Well, if you had taken a map of the USA, and had drawn a line between Carteret in New Jersey (home of the NASDAQ data center) and Chicago, you would have noticed that this fiber glass seems to follow exactly that line you’ve just drawn. Without knowing it, you would have been one of the first persons to know about Spread Networks. This private company built the shortest fiber line (825 miles / 1330km) between American main stock exchanges. The project has cost over 300 million US$. All of that in order to reduce the latency time. Why? Because speed gives an advantage in high frequency trading. People using this fiber line, will be able to buy or sell a few microseconds before their competitors. 

A book for the summer

Michael Lewis starts his book with that little story, which I still find incredible. Then he introduces the reader to several characters: a rebellious Canadian stock trader, a Russian computer programmer, a prominent American investor, and many more that he follows during the entire book. Thanks to his storytelling, Lewis manages to hook the reader on such a dry and rather technical topic. He also succeeds to explain with simple words how today’s market work. 

Flash Boys shades a light not only on how the finance market works, but also on how our society has developed recently. It will make you (re)think the role of the state in regulating businesses.

Checkout Flash Boys in our Bookclub and get it right onto your device. You will also find other interesting books you may want to checkout for your summer holidays.

 Enjoy the read!

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