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Flash Boys

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Four years after his #1 bestseller The Big Short, Michael Lewis returns to Wall Street to report on a high-tech predator stalking the equity markets.

Flash Boys is about a small group of Wall Street guys who figure out that the U.S. stock market has been rigged for the benefit of insiders and that, post–financial crisis, the markets have become not more free but less, and more controlled by the big Wall Street banks. Working at different firms, they come to this realization separately; but after they discover one another, the flash boys band together and set out to reform the financial markets. This they do by creating an exchange in which high-frequency trading—source of the most intractable problems—will have no advantage whatsoever.

The characters in Flash Boys are fabulous, each completely different from what you think of when you think “Wall Street guy.” Several have walked away from jobs in the financial sector that paid them millions of dollars a year. From their new vantage point they investigate the big banks, the world’s stock exchanges, and high-frequency trading firms as they have never been investigated, and expose the many strange new ways that Wall Street generates profits.

The light that Lewis shines into the darkest corners of the financial world may not be good for your blood pressure, because if you have any contact with the market, even a retirement account, this story is happening to you. But in the end, Flash Boys is an uplifting read. Here are people who have somehow preserved a moral sense in an environment where you don’t get paid for that; they have perceived an institutionalized injustice and are willing to go to war to fix it.

274 pages, Hardcover

First published March 31, 2014

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About the author

Michael Lewis

45 books12.2k followers
Michael Lewis, the best-selling author of Liar’s Poker, The Money Culture, The New New Thing, Moneyball, The Blind Side, Panic, Home Game, The Big Short, and Boomerang, among other works, lives in Berkeley, California, with his wife and three children.

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Displaying 1 - 30 of 4,573 reviews
Profile Image for Always Pouting.
568 reviews697 followers
February 11, 2020
Honestly investment and stock exchange is something that bores me to death so I was putting off having to read this one for a while and today I forced myself to get it over with. I was surprised to find that the book was really interesting though, I had no clue about High Frequency Traders or dark pools or even the arrest of Sergey Aleynikov which is honestly absurd. I think the information was accessible and easy to understand but I don't think it would be interesting to anyone who didn't have some interest in the engineering or math of the whole thing. I did feel bogged down by the details though especially of the people involved and their back stories. I know the whole purpose of the book was to talk about the small group of people trying to change things but I thought all the logistic stuff was the most interesting aspect of the book.

Profile Image for Steve.
251 reviews872 followers
May 1, 2014
The new book by Michael Lewis criticizing high-frequency trading has created quite a stir. I’m imaging what a PR response might look like, though not an entirely serious one. It’s structured in FAQ format, but the questions aren’t really frequently asked so much as ones I’d like to answer. The ideal audience would be the inquiring readers of Flash Boys open to a counterbalance.

Q: Who is this Michael Lewis guy and why has this book been making such a splash?

Lewis is an influential writer with a talent for making his readers feel smart. It’s like they’ve been given inside access to some previously hidden world. Depending on the book, it could be
- an intimate understanding of how richly compensated alpha males at a trading desk on Wall Street dominate the poor schlubs (Liar’s Poker)

- how a cash-constrained baseball executive can use statistics to cobble together a winning lineup (Moneyball)

- how the geniuses of modern day football came to realize the importance of a great left tackle in protecting the quarterback’s butt (Blind Side), or

- how a select few investors could foresee the folly of investing in subprime mortgages doomed to default (The Big Short)

And he does this in a readable way. He explains complicated mechanics in understandable terms, he identifies heroes and villains, and he structures his narrative like any good writer would, building to conclusions after couching them as mysteries or puzzles for his brainy protagonists to solve.

While Flash Boys features many of those same traits, it seems less like good investigative journalism this time. In fact, it feels more like marketing literature, or maybe a prosecuting attorney’s closing argument. Lewis has been criticized for not having spoken to anyone who knew about HFT (high-frequency trading) from the other side of the fence. That’s the raison d’etre for this FAQ of sorts.

Q: Let’s wade in the same way Steve Kroft did with Lewis in his 60 Minutes interview. What’s the headline here?

Essentially this: Michael Lewis is going to sell a whole bunch of books and will end up, by dint of some serious negative spin, manipulating public opinion way more than HFT has ever manipulated markets.

Q: Is the industry reeling from the critical language? You and your market rigging ilk are evidently a “cancer”; nothing but “parasites”. In addition, in an impressive burst of lawyerly bombast, financial fraud attorney Andrew Stoltmann describes you as “little more than digital piranhas, creating feeding frenzies that can send the market into volatile, spasmodic fits” leaving “a trail of carnage.”

Yeah, but aside from that we’re not so bad. Seriously, it’s frustrating when you know something is, at worst, light gray and someone with a microscope comes along training his lens on the black pixels only, saying “Oh, look how black it is; and hey, there’s another one.” And it doesn’t help when the lens is smudged so that each one he focuses on seems darker than it really is.

Q: You’ll admit Lewis did a good job choosing his hero, right? If there’s such a thing as Boy Scouts of Canada, I bet Brad Katsuyama earned every one of their badges. He’s bright, hard-working, earnest, and no doubt set the standard for what the Royal Bank of Canada called “RBC-nice”. He’s the one who explained to Lewis and others what was happening when he attempted do a big trade. A split second after he’d enter his order, the market dried up on him. The quantities displayed on his screen at his targeted price were disappearing before he could get all he wanted.

You’re right about Brad. He does come across well. To be honest, though, at first he was a little naïve. He was somehow expecting that his order for say 100,000 shares wouldn’t have an immediate price impact that reflected the new knowledge of a big and abiding appetite. Even back at that time, most sophisticated players in the market knew they’d have better luck breaking their order up, trading chunks here and there at different times and different exchanges as liquidity would allow rather than spooking the market with an order size that was bound to change the equilibrium price in an instant.

Q: Yeah, but what about the front-running, where speed demons would take their knowledge of Brad’s intention to buy and go to other exchanges to buy ahead of him, driving up the price and making Brad pay more to get all the shares he wanted?

OK, first of all, please use quotes when you use the term front-running. In fact, don’t use it at all. Front-running, properly defined, is an immoral and illegal act where a brokerage firm uses knowledge of its own customers’ orders to jump ahead of them in the market in anticipation of easy profits when the customer transactions cause the price to change. Anybody doing that truly is scum. They’ve broken the fiduciary trust, may make their customer pay more by the time the order gets to market, and have stolen privileged information to advantage themselves.

Q: Back to the issue at hand, is whatever this thing is that you don’t call front-running fair? Brad, our authority on what’s “nice”, didn’t think so.

A certain segment of the market probably does consider itself put out by these fast-changing conditions. But we need to look at the situation from a broader perspective. Once I explain I hope you’ll see why not everyone agrees with our “nice” friend.

Q: Is this something we can understand by way of the company Lewis made up to illustrate his point – Scalpers Inc.? They’re the ones who would hastily get in ahead of every investor order, buy up all the shares, then sell them to the investor at a higher price after front-running running in front of them.

Grrr – “running in front of” – for that I’m going to double the length of my response. So, in Lewis’s unrealistic example we’re to believe that those rascals at Scalpers Inc. somehow know with great certainty that the poor honest investor has a certain size trade to do, somehow skips ahead in line to snap up those shares, raises the price and imposes its insidious tax, all without risking a dime. Bzzzzzzt! Wrong. I’m sure Lewis would argue that this example was concocted for pedagogical purposes, meant only to illustrate net effects that we see. But it’s so far off the mark that it’s very misleading. First of all, for the big investor’s hand to have been tipped, a chunk of their order had to have traded. Then, Scalpers Inc. would have to make an educated guess about what the future price impact would be from the unknown remaining order size. From there, Lewis would have you believe that a sort of queue jumping would occur. Not true. The best they could do would be to go to another exchange to see if it’s worth crossing the bid/ask spread to bet on whether they predicted the big investor’s demand and possible price impact correctly. The Scalpers Inc. team is at its luckiest when they guess right about the price move and some of the participants quoting at the various exchanges (often HFT players themselves) hadn’t reacted yet either because they were slow or they disagreed about what the fair price should be. In this scenario, the big investor is likely to see the market back away from its order (meaning that market makers are cancelling the rest of their quotes at that price level). Again, that’s just a natural reaction to what is now viewed to be a new fair value from the market equilibrium.

Q: That makes sense, but it’s a lot to chew on all at once. Can you back up just a skosh to cover how these markets are structured and who does what, when, where and how?

Sure. The first thing to understand is that everyone wants to buy low and sell high.

Q: OK, wise guy. You do know the meaning of skosh, right?

Your archaic patois suggests that maybe I should start with intermediaries, specialists, market makers and bid/ask spreads. As you (probably) know, market intermediaries have served a useful function since the days cavemen were trading mastodon futures. Be they human or algorithmic, the goal is to provide liquidity by committing to buy at a lower price and sell at a higher price, serving as a conduit to facilitate trade. Of course it would be easy money if motivated buyers and sellers consistently and in synchrony came along to buy at your higher selling price and sell at your lower buying price. However, the spread between those two prices has to be big enough to compensate for the times when it’s only sellers coming along; and poor you, you’ve bought something falling in price without any buyers to sell your inventory to at the higher price. Of course, the market maker can be hurt in rising markets, too, with a short position that’s getting more and more expensive to buy back. The more the market makers can do to reduce those risks, the more willing they are to cut the distance between their buying and selling prices in order to attract extra business. Spreads are now razor thin. This is a huge benefit for the rest of the market, and apparently an underappreciated one.

For anyone who has made it this far, and wants to see more, the faux FAQ continues here. In it, we cover such topics as the trend not being your friend, picking up pennies in front of steamrollers, whether or not HFT liquidity is a canard, Insider Trading 2.0, and name-calling invoking such figures as Marie Antoinette, Hitler and Bernie Madoff.
Profile Image for Darwin8u.
1,559 reviews8,668 followers
December 11, 2015
“Shining a light creates shadows”
― Michael Lewis, Flash Boys


There was a temptation to write my review before I had finished reading. To get there first before other reviewers. This race to be first, however, sometimes requires a pause, a reflection, about what speed, transparency, fairness actually requires from individuals and companies. The world of finance is often opaque. Between executing a trade with your broker and another individual accepting that trade through their broker there is a ghost world operating on mico-slices of a second. It is a world filled with algorithms that are all focused on a zero-sum game where the individual seems to lose every single trade. It is a wild west where everyone is getting the shaft, except for the large banks and the high-speed traders.

“Every systemic market injustice arose from some loophole in a regulation created to correct some prior injustice.”

No one is better at exploring the technical world of money and finance on Wall Street (and in Sports) than Michael Lewis. His talent is most obvious in his ability to spot inconsistencies, absurdities, and flaws in a system and explain them using great characters and narratives that the characters tell themselves. There is no Moneyball without Billy Beane, there is no Blind Side without Leigh Tuohy and Michael Oher, and there is no Liar's Poker without John Meriwether and John Gutfreund. There would also be no Flash Boys without Sergey Aleynikov, Brad Katsuyama and Ronan Ryan.

“The U.S. financial markets had always been either corrupt or about to be corrupted.”

These characters MAKE this book great. Lewis, however, is what makes this story vibrantly great. He is a master of the New New Journalism narrative, a master of timing, and a master of getting to the story before the other suckers do. And... he appears to do it not just because he is fantastically good at it, but from all appearances because, like Brad Katsuyama, Lewis actually gives a micro-F about making the system deliver on its promise.
Profile Image for David Rubenstein.
801 reviews2,521 followers
July 26, 2014
This book is wonderful; it is well-written, engaging, and the subject is fascinating. I had never given much thought to stock exchanges, trading, and the processes that occur there. Michael Lewis manages to make the subject transparent and interesting! He describes the activities of so-called "High Frequency Trading" (HFT), where buy and sell orders to stock exchanges are intercepted and prevented from occurring at the stated price. These HFT activities go on, largely unnoticed, though they account for much of the activity in stock trading. And--they skew the market in a way that robs huge amounts of money from legitimate investors. Also, I learned about the soj-called "dark pools", the non-public stock exchanges that the public never hears about. They play a large role in the way big banks earn money from brokers and high frequency traders.

The first half of the book gives the background behind HFT, how it operates and why it is allowed, even encouraged by the big banks. The second half of the book describes how Brad Katsuyama, an executive at Royal Bank of Canada, quit his job to start up a new stock exchange that would do its best to level the playing field. He set up the new Investor's Exchange (IEX), an alternative trading system that does its best to prevent HFT from profiting. This exchange is now less than a year old, but seems to be doing very well. It is the ONLY stock exchange that actually publishes its rules, making the process transparent to investors and brokers.

I didn't read this book--I listened to it as an audiobook. Dylan Baker is that narrator, and he does a very good reading. He certainly kept me engaged, and wishing the book would not end.
Profile Image for Brian Yahn.
310 reviews592 followers
September 1, 2016
Michael Lewis explains how the stock market became such an incomprehensibly unfair system as a natural byproduct of human greed and animosity.

At one brief point in history, we viewed investing as a way to make the world better off for everybody involved. But then Wall Street's greed took over, starving for instant gratification, and turned investing into a zero-sum game: the only way they see a win is if ordinary, hard working, productive members of society lose.

In Flash Boys, the financial system is operating as a singular short-sighted monster striving to bring the entire world to its knees. But a few white-knight Wall Streeters are revolting against the beast, and they're winning. It's like David vs Goliath except with higher stakes. Michael Lewis turns the story of Brad Katsuyama and IEX into the Hero's Journey to the promised land.

In typical fashion, the story starts as a plot-based thriller, becomes an incomprehensible mystery of high frequency stock trading, then a parable of what's gone wrong with civilization, and finally it ends on a bleak note of hope: that the good guys will come out ahead and bring all of society with them, like has always happened in the past.

The biggest problem for me is that, what Michael Lewis is known for, explaining crazy complicated things in a way anyone can understand, he doesn't really even attempt here. He's both short on details about high frequency stock trading and repetitive. He spends a lot of time explaining the obvious, like how granting unfair access to information to private parties corrupted the entire system. But gloses over almost everything else, including--more or less--the resolution, how Brad Katsuyama and IEX are actually fixing it.
Profile Image for Riku Sayuj.
653 reviews6,943 followers
October 8, 2014

It's All Rigged Folks!

The seemingly democratic 'market' is a class system and the name of the game is speed. There is a hierarchy of speed in place and the haves are looting the have-nots.

Taleb made a name for himself ridiculing the markets, the experts and the traders - attributing whatever money these blokes made to dumb luck. Nobody can game the market, he said. We all liked that. Yes, they might make money, but they sure as hell do not deserve to be smug doing so. Plus, at least we can also play in the same markets and have the same long odds.

Lewis asks to look closer and exposes that the markets are not just populated by lucky dupe-artists trying to pass themselves off as smart, but by super-tech ninjas with unknown super powers. Ok, so these guys not only make money but are also gaming the market so that they cannot lose at all? They are borderline illegal in making their money? Now we cannot play in the market at all? Not only is Wall Street primarily for the top guns, but is it also becoming more and more an exclusive club where the rest enter only to be skinned?

The game is thus:

You see the ticker price on your screen and place an order to buy some shares. The order is then transmitted electronically to the exchanges to satisfy your order. However, it is going to take some time getting there, and just like Flash does in those comics, there are traders who can check on your order, run ahead of it and place an order themselves to buy the same shares, then turn back and be waiting for your order when it arrives so that they can sell the shares you need to you. They take no risk this way since they engage in the market only when they have an assured buyer/seller.

“As soon as you realize this,” he said, “as soon as you realize that you are not able to execute your orders because someone else is able to identify what you are trying to do and race ahead of you to the other exchanges, it’s over,” he said. “It changes your mind.”

It was as if only one gambler were permitted to know the scores of last week’s NFL games, with no one else aware of his knowledge. He places bets in the casino on every game and waits for other gamblers to take the other side of those bets. There’s no guarantee that anyone will do so; but if they do, he’s certain to win. So yes, some can play the market and make no losses whatsoever for years on end, precisely because they take no risk.

Go here for a detailed summary, it is worth understanding: http://online.wsj.com/news/articles/S...

Now, this is an interesting concept and it is also a story that needed to be told, but it did not require these many pages to do it in. Lewis drags the story to such an extent that it almost grinds to a halt a times. The detailed story on the laying of the high speed cable, the story about the engineer who helped GS in managing their HFTs, the rise of the wallstreet-nobody, etc. adds nothing to the core story, which is about how a bunch of good guys from wall street (gasp!) tracked down what was happening and did their best to put an end to it.

Most of Lewis' books have stuck to the story of one guy or a group of people working their way through a maze, being very clever doing so, and coming out with game-changing revelations. That works. But this time around the material was not large enough (perhaps because Big Finance is more closely guarded than most fields?) and, quite unfortunately, Lewis decided to pack some peripheral stories in. It added nothing and diluted the sense of adventure. It just made the core detective story less exciting. I would have preferred this helping in half the number of pages, or less. Much of it was a waste of time, but the message was not:

The Core Message:

The entire history of Wall Street was the story of scandals, linked together tail to trunk like circus elephants. Every systemic market injustice arose from some loophole in a regulation created to correct some prior injustice. No matter what the regulators did, some other intermediary found a way to react, so there would be another form of front-running.

First, there was nothing new about the behavior they were at war with: The U.S. financial markets had always been either corrupt or about to be corrupted. Second, there was zero chance that the problem would be solved by financial regulators; or, rather, the regulators might solve the narrow problem of front-running in the stock market by high-frequency traders, but whatever they did to solve the problem would create yet another opportunity for financial intermediaries to make money at the expense of investors.

The final point was more aspiration than insight. For the first time in Wall Street history, the technology existed that eliminated entirely the need for financial intermediaries. Buyers and sellers in the U.S. stock market were now able to connect with each other without any need of a third party. “The way that the technology had evolved gave me the conviction that we had a unique opportunity to solve the problem,” he said. “There was no longer any need for any human intervention.” If they were going to somehow eliminate the Wall Street middlemen who had flourished for centuries, they needed to enlarge the frame of the picture they were creating. “I was so concerned that we were talking about what we were doing as a solution to high-frequency trading,” he said. “It was bigger than that. The goal had to be to eliminate any unnecessary intermediation.”

Drive out the middle-men, even as they cry doom at the prospect of a market without liquidity? That is what IEX and the ultra-computerization brand of anti-predator customer solidarity and equality presented by Lewis is really advocating. If you think about it, that is a body blow to some of the most cherished concepts of capitalism itself.

Profile Image for Dannii Elle.
2,010 reviews1,406 followers
July 9, 2016
In all honesty I picked this up as Wall Street and the stock market are something I have an intetest in but little acual knowledge of. Whilst definitely an interesting read and providing the right amount of shock factor, I felt like I was just skimming some areas without digesting any of the information. Maybe this is to do with my own limited understanding, but it felt like the core story was dragged and repeated to reach the subsuquent length. This overtelling led to any feeling of shock at the corruption detailed becoming muted and my enjoyment waned a little as the book progressed. This story is definitely one worth reading but be pre-warned that there is a fair amount of repitition.
Profile Image for Mara.
400 reviews275 followers
March 3, 2015
On Reading & Rating
For my money (which, since I'm neither a Wall Street tycoon, nor a Russian coding genius, isn't a whole heck of a lot) this isn't Michael Lewis' best work. My reading experience was a mix of fascination and frustration. Why the latter? Lewis covers (and condemns) a whole bunch of different things. Agreement aside, as a human who reads books, this lack of distinction is what resulted in the bulk of my star-docking (I'd give it a 2.5/5 if half-stars were street legal around here) and, I'm guessing, some of the backlash against the book among insiders. Lewis' books often seem to spawn ‘for’ and ‘against’ camps, but with this one I can't for the life of me figure out where I fall!!

I was hoping to have come to a resolution before attempting to write a review, but, as time passes, it seems like that's just not in the cards…

Since Flash Boys evoked some pretty heated internal debates between Mara and Other Mara I'm gonna let you know where I'm coming from (by all means, feel free to skip ahead—I'll even spoiler-ize this section it all the more skipable for you).

In reality neither I nor the voices in my head know much about the logistics of trading beyond the scope of this book, but what follows is a list of some of the points of mental contention.

1. The Need for Speed
While I'm very pro Net Neutrality and public access to public goods, I had trouble discerning an appropriate analogue for Dan Spivey and his super straight, super fast, fiber optic cable.
HFT Express Lanes Map
Let's say that information travel is like human travel. If information highways are the equivalent of, well, highways, then yes, everyone should have equal access. However, there are people who are willing to pay a premium to get to and from wherever they need to be more quickly and more reliably—perhaps by helicopter or private jet. Heck, us common folk can cough up cash to get better bandwidth, so that much seems fair.

However, what about all the eminent domain stuff? Well, I don't know. Is this any different from 'air rights' transactions?

2. Information Asymmetry
Let me start by zooming out a bit here. Some games are games of “perfect information.” Chess is probably the most commonly cited, but backgammon, and tic-tac-toe both share the same requisite attributes: both players are completely aware of the state of the game at all times.

In order to avoid launching into a treatise on Bayesian Nash Equilibrium and such, I'm gonna just lump games like poker or crazy eights, or the Prisoner's Dilemma in together as games of imperfect/incomplete information.

Information asymmetry, on the other hand, exists when one party has more or better information than another. And, FYI, we deal with transactions of asymmetric information all the time! I don't care if you go on car fax, or get a whole bunch of quotes from contractors before remodeling your kitchen—even if we have access to information, we deal with people who could, theoretically, screw us over because they simply know more.

Of course, there are different types of information asymmetry when it comes to financial markets. For example, “insider trading” is an example of information asymmetry that, in most cases, is illegal.* Most of the time when one refers to “information asymmetry” it's not a good thing, but it seems to me (and, again, I'm no expert) that certain types of information asymmetry make the world go round. It’s not that it’s always innocuous, it’s just that we allow (and encourage) it on so many other levels. The market would be static if everyone thought that they had the same amount of information (or less than) everyone else out there. Right? (Seriously, I’m asking…)

3. The Fight for Fairness
My dad, who read this book a while back, contended that before *something* (high-frequency trading, I'll assume), the market used to be a level playing field. My knee-jerk reaction was that this simply wasn't true. But, then again, there are many different types of unfairness (and I'll have to ruminate on this some more before I figure out what exactly these are).

This is definitely the part of the book about which I feel most conflicted. Other than Brad Katsuyama, the Patron Saint of Fairness, who exactly are the good guys supposed to be in this all?
Flash Boys The Evolution of Wall Street
I don't know how much input (if any) Michael Lewis was allowed to give on the cartoon above, but it captures perfectly what rankled my nerdy feathers most—the idea that, basically, it's these computer-using hoodlums that are responsible for the injustices of Wall Street.

4. Dark Pools and Fiduciary Duty
As far as this part goes, I just felt like I need more information than I was given—dark pools seem shady (they have the word ‘dark’ in their titles, after all), but I also don't know how a client's investment ends up there.

Though I'm taking it into a new context, I'm gonna make use of an analogy Chris Stucchio laid out in “A Fervent Defense of Front-Running HFTs” (the thesis of which, BTW, I'm not totally sold on). In the context of a competition (and, let's be real, the stock market is definitely a competitive arena) the rules of engagement are different depending on the relationship between the parties involved.
Rocky Mickey vs Rocky Apollo
So, if Mickey (who is Rocky's coach) punches Rocky in the face, that's bad. It's unfair, and, as Chris put it, that would mean that Mickey is an asshole. Conversely, if Apollo punches Rocky in the face, this does not make him an asshole. Actually (and here I'm taking it a step further than Chris did), Apollo would be an asshole if he didn't at least try to punch Rocky in the face. There are people counting on him to do just that!

Questions? Comments? Snide remarks?
So yeah, I'm just going to leave it there with this loosely related boxing analysis that I haven't even tied back in with the book. I don't want this to add to my growing list of languishing, half-finished reviews, so I'm putting it out there, half-baked thoughts and all.

In addition to snide remarks, I'd be happy to field any further reading recommendations, especially anything that begins to describe normal, “just” behavior in and on Wall Street (and those fast, straight wires running across the globe) because, damn, is that stuff ever difficult to find!

If you found this book interesting I highly recommend checking out Steve's two-part review (learning and laughing always pair nicely).
* Thanks a lot SEC—turns out there is legal insider trading, which is just confusing.
Profile Image for Kathryn.
136 reviews37 followers
April 5, 2019
I was a back office spreadsheet jockey performing daily reconciliations on non-dollar swaps for a merchant bank in London in the late 1990's. They employed me because I had a background in corporate accounts but mostly because I looked good in a skirt and knew how to put a bet on a horse at lunchtime.
To start with it was fun. The volume and value of transactions was unlike any job I'd had before but eventually I became uncomfortable because I was starting to fall behind.
When I explained the situation to my line manager, he had a word with his boss and they sat down to look at my process. I couldn't match the transactions fast enough because I wanted my reconciliations to show actual trades - I wanted to match the buy notes with the sell notes. They understood and encouraged me to ask the US office for more information on the trades I was having trouble with. The U.S. office replied, "You should know how to do this by now. Don't match them, just batch them until you catch up."
So I did. Every day everyone on my team would receive a new spreadsheet containing trades worth hundreds of millions of dollars to reconcile for their particular variation of financial instrument and as long as I was around USD$100,000 under or over at the end of each day, I was told that that was more than good enough. In some ways it was. I understand the term "material" but grew more and more uncomfortable with my role and no, I never ever caught up.
It was the scale of it that really concerned me. I was just one person on one floor, in one bank, in one city. There would have been tens of thousands of us working like this. I left because my visa ran out but I was so relieved to go.
Reading "Flash Boys: A Wall Street Revolt" has been like seeing a therapist. I cannot emphasise enough what a relief it was to read about people working in that sector, much more recently, questioning the fundamentals of what they were doing and then having the courage to create change. All I saw, and I was party to it for quite a while, were people who just needed a job and would keep taking that pay packet for as long as they could. These were the days when my corner store stocked Verve Cliquot next to the milk and for my very menial 40 hour a week role I was earning enough to buy three bottles an hour.
If you have a slight interest in financial markets, you'll lap this book up. For those who're feeling a little cynical about the author's viewpoint, I still think you'll find it a page turner.
Highly recommended.
Profile Image for Nick Black.
Author 1 book703 followers
April 4, 2014
wow. definitely Lewis's best book since Moneyball or Liar's Poker, though I'm waiting to talk to some high-frequency trading friends before i make final judgments. definitely a hell of a book to read here in Lower Manhattan, in the shadow of Wall Street, before going in for an interview at Goldman Sachs. lots of great quotes and superb little vignettes and character studies (the hallmark of Michael Lewis reporting). quite a bit seemed to have been recycled from his pieces for Vanity Fair over the past few years, though (the chapter about Sergey Aleyniko definitely lifted some material directly from VF).

fwiw, a friend of mine at Virtu Financial (who admits being heavily biased, as Virtu is one of the firms called out as exploitative) says that "Lewis's ignorance of how the markets really work made [the friend] sick to his stomach," and couldn't finish the book. so, take things with a grain of salt for now. from my own standpoint, some of Lewis's technological comments seemed ludicrous (passwords in one's bash history? what?). nonetheless, fascinating.

update so i talked to some coworkers who were at Two Sigma (another HFT firm), and they had some pretty good counterarguments, mainly that spreads have been tightened almost to zero, and that many techniques are simply the logical conclusion of natural trading, and have simply made intractable bad practice. both concluded, however, with the statement that "the street is a horrible place, and they are all sharks."

second update this response is worth reading: http://scottlocklin.wordpress.com/201...
430 reviews
November 9, 2020
I'm a longtime reader & fan of Michael Lewis, but with this book he jumps the shark.

While reading this book I found myself at first laughing with Lewis and then laughing at Lewis. In the end I threw the book away, annoyed & saddened by Lewis's inability to accurately report the history & function of HFT.

Instead of listing my complaints I'd direct readers to better analyses, like these from Manoj Narang, Cliff Asness, Matt Levine, Matthew Phillips and Michael Peltz.

Lewis would do well to heed the advice of (his cousin) Nicholas Lemann, former dean of Columbia University's journalism school, on the care that need be paid to "framing" a narrative—which Lewis completely botches in Flash Boys.


Future historians will look back upon this age of HFT hysteria and wonder how it came to pass that Brad Katsuyama, a major-money-center bank employee who was paid $2 million/year to manage an unprofitable division (?!!), was heralded as a hero of the common man, while Dave Cummings, a Kansas City programmer who almost singlehandedly broke NYC's monopoly control of stock trading, was depicted as a villain.

Below are inchoate thoughts I might someday refine:

Lewis repeatedly tells his readers where his protagonists were on the morning of Sept. 11, and then uses that anecdote to riff upon how important the need for "meaning" has become in the workplace—a theme he first riffed upon in this 2008 column:


Lewis told readers in that column: "[A]sk yourself: Am I looking for a job, or a calling?" — a deep question to pose to readers but one that presumably lurks not far below the surface of Lewis' (or my) own thinking.

HFT appears to upset Lewis because it evacuates meaning from the world—it's all algorithms. The traditional man of faith seeks transcendence; he wants contact with God, the One, the Truth. But today's modern economy, financial markets, and workplace has made it harder to find meaningfulness in everyday employment. This may give rise to existential angst.

In a sense Flash Boys can be read as a quest-romance—a quest for stable meaning in a world of 9/11 terrorist attacks, missing airliners, bad fills, and diseases like ALS.

Once upon a time on Charley Rose's talkshow, Lewis described his oeuvre as travel writing—a kind of anthropological exploration of foreign cultures, an apt description in my view.

HFT hysteria, however, is a phantom menace that Lewis has ginned up (but why?) to waste the world's psychic energy. Surely no reader will be satisfied to trudge thru his book only to learn at bottom that his book amounts to a cri de coeur against (wait for it) "hide-not-slide" market-type orders. Is that all there is? If so (as Peggy Lee sang) then let's keep dancing, let's break out the booze and have a ball.

Contrary to impressions, neither Lewis nor Katsuyama oppose HFT. Katsuyama told a reporter (Oct. 2013):
"We're not anti-HFT...." To that end, Katsuyama and Ryan have been meeting with HFT firms and listening to their ideas.... 
"There's always talk that HFTs are gaming the system and how there is a need to filter them out," Katsuyama said. "But there are HFT strategies out there that are of benefit to the market. Some HFT firms have embraced us, while others have not."

Flash Boys (p. 171): "They couldn’t very well prohibit high-frequency traders from trading on the exchange.... And, anyway, it wasn’t high-frequency trading in itself that was pernicious; it was its predations"

So, Lewis isn't opposed to HFT; he's opposed to "predations". Easy peasy.

Saul Bellow once said that when "Asked for an opinion on some perplexing question of the day, I sometimes say that I am for all the good things and against all the bad ones."

Lewis & Katsuyama are against bad things—like predations. Can we all agree that predations are bad? Now what?

I think Lewis is persuaded by Heidegger's critique of technology.


By far the most frightening Wall Street character in Michael Lewis' oeuvre is John Schwall, IEX’s COO, whom Lewis' describes in these pages as something of a cross between the real-life Edward Snowden and Strelnikov, the Bolshevik commander in Doctor Zhivago. Stay outta this dude’s way; he’s on a mission from god — to rid the world of “hide not slide” orders.

In Lewis' rendering, Schwall has been galvanized by his mother's tragic death to becoming an avenging angel dedicated to righteousness and purity of heart:

“Wall Street is corrupt, I decided," said Schwall.... (page 92)

After [Schwall] met Brad, he was certain that the market at the heart of capitalism was rigged (95).

Schwall: "I knew who was being screwed, people like my mom and pop.... (95)

“There was quite a bit of vengeance on my mind,” [Schwall] said. A streak of anger ran through him, ... where it came from Schwall could not say, but he knew perfectly well what triggered it: injustice. “If I can fix something and fuck these people who are fucking the rest of this country, I’m going to do it,” [Schwall] said (p. 100).

[Schwall] learned ... there was nothing new about the behavior they were at war with: The U.S. financial markets had always been either corrupt or about to be corrupted. (101)

Schwall had started out looking for the villains who were committing crimes against the life savings of ordinary Americans.... He wound up finding, mainly, a bunch of people who had no idea of the meaning of their own lives. In his searches, Schwall noticed ... [a] surprisingly large number of the people pulled in by the big Wall Street banks to build the technology for high-frequency trading were Russians. “If you went to LinkedIn and looked at one of these Russian guys, you would see he was linked to all the other Russians,” said Schwall. (127)

Schwall is by far Lewis' most frightening creation, last seen in these pages muttering to himself that the source & object of his vengeance is . . . Russians.

But by page 241 Schwall is seen enjoying a contraband $300 bottle of Champagne, far in excess of the $40 limit vendors may 'gift' to exchange officials, apparently corrupted the perks of his position & power, like Strelnikov in his luxury train car.

Schwall is far more frightening than any of Lewis’ prior villains, those hapless & mostly harmless characters conjured from Lewis' rich imagination that he named John Gutfreund (Liar’s Poker) or Wing Chao (The Big Short).

Someone had given Ronan a $300 bottle of Champagne. He’d told Schwall that it had cost only forty bucks, (241)
“Ronnie’s saying to himself, ‘You work for twenty-five years in the business, how often do you have a chance to make a difference?’ ”
"Brad thought that their bid to create an example of a fair financial market—and maybe change Wall Street’s culture—could take longer and prove messier. He expected their first year to feel more like nineteenth-century trench warfare than a twenty-first-century drone strike."

This book says so much more about Lewis' mind than it does about anything related to wall street.

Michael Lewis & Margaret Mead share some similarities: they both prominently were first to file important anthropological reports on their respective subjects, reports that were later found seriously wanting. But the errancy of their reports doesn't diminish the fact that Lewis & Mead were first upon the scene with notebooks, they paved the trail.
Profile Image for Sam Quixote.
4,451 reviews12.8k followers
October 11, 2015
Michael Lewis returns to his familiar stomping grounds of Wall Street to report to the rest of the world that, shock, stockbrokers are as corrupt as ever, even after the 2008 crash!

Flash Boys looks at the phenomenon of high frequency trading and its complex corruption. The image of brokers wearing blazers shouting on trading floors is long defunct with brokers these days staring at computer screens in locked rooms, the trades happening on screens in microseconds. The new dichotomy is that whoever has the tiniest advantage of a fraction of a second’s speed makes the most money.

It’s a complex book - at least to me, someone who has almost no knowledge of how the stock market works! - though Lewis does his best to explain it to the layman. Basically fibre-optic cable needs to be in as straight a line as possible to achieve the highest speeds so a line was built between New York and Chicago that was exactly that, giving those firms who used it the advantage of a few fractions of a second, translating into billions in profit every year.

The system is that someone places an order to buy shares at a price, the high frequency trader intercepts the order and buys shares at a slightly cheaper price, completing the order and pocketing the difference, usually a penny or so on the dollar - but these numerous micro-transactions adds up tremendously. And it’s kinda illegal, especially once “dark pools” were created - private stock markets where the buyer doesn’t see what the brokers are up to and no records are kept, making the skimming easier to do.

Lewis’ protagonist, so to speak, is Brad Katsuyama, a broker at Royal Bank of Canada (eh?), who saw the unfairness of this system and sought to redress the balance with a new model stock market called IEX. His new model was designed to make things more fair, more transparent, while also making the market more stable to avoid crashes like in 2008.

It’s inspiring that guys like Katsuyama would try something like this especially as many people have the idea of Wall Street being a place of unrepentant greed, ego and corruption - which it largely is. Goldman Sachs once again comes off looking like the biggest, sleaziest, most evil collection of fucks in the world, the kind of human garbage which make atheists like me wish there really is a hell for them to burn in for eternity. But it looks like IEX worked and Katsuyama made a real difference.

I usually enjoy Lewis’ books as he takes on some major topics and makes them accessible and interesting, like in The Big Short (about the 2008 crash) and Boomerang (the aftermath of said crash) - both highly recommended by the way.

Unfortunately Flash Boys, while a logical next step in documenting the financial chaos of our times, was a bit too esoteric for me. It felt overly complex particularly as I’m not especially interested in the stock market and have no dealings with stocks/shares anyway, so it seemed a bit irrelevant from my perspective. As a result it also seemed overlong and more than a bit boring. I zoned out quite a bit even though I tried my best to get a handle on the subject.

I think readers who would enjoy Flash Boys should be very interested in finance and the stock market, beyond the level of the dilettante. Still, I applaud Lewis’ efforts to keep the masses informed on the nitty gritty shittiness that Wall Street keep trying to get away with. Flash Boys wasn’t a book that spoke to me very deeply but I’m glad there are guys like Michael Lewis and Brad Katsuyama out there, using their wits and skills to keep fuckers like Goldman Sachs in line.
Profile Image for Trish.
1,352 reviews2,396 followers
September 9, 2016
Michael Lewis has given us another great read, leaving us pondering big issues about the latest wall street scam and the point of society. In today’s world, the information he shares about high-frequency trading (HFT) on Wall Street feels dated before it arrives on the page…before we read it…before we can act on it. At first I was aghast that information about the, in effect, skimming or taxing of trades on the [any] stock market was old—this stuff was recognized in 2010! Why are we just learning about it?!

But of course now I realize that the folks that knew about it weren’t talking—why would they? And the market was going up, so taxes on increases weren’t as onerous to investors as it would have been had they been losing their shirts. But also, Brad Katsuyama was setting up his own exchange, IEX, to do something to counter the activity. It would not have made as satisfying to discover the problem without a solution being presented.

Katsuyama gathered a collection of folks no one could make up in their wildest dreams and sought ways to hamper the effects of high-frequency trades on investors. Lewis calls Katsuyama "an American hero" in his April 1 interview with Charlie Rose. Katsuyama was Canadian-born and came to Wall Street for the Royal Bank of Canada. He was successful as a trader, making about two million dollars a year in salary and bonuses, but noticed odd things happening to his trades about 2007. Lewis shares what happened to Katsuyama's thinking as he explored the reasons for the artifacts he was noticing on his screen as he traded.

This is an interesting story, but the most interesting part of the story is undoubtedly what comes next. Three days after the publication of Lewis’ book, Attorney General Holder announced the DOJ has an on-going investigation into high-frequency trading on stock exchanges. While the activities of high-frequency traders may or may not be strictly illegal, there is no doubt about its corrosive and costly effects.

Traders knowledgeable about the scandal acknowledge that something much like this skimming has been going on since the market began over a century ago, and will probably go on again in another form if this instance is regulated out of existence. Many of the traders introduced in this book are filled with awe at the perspicacity and persistence of HFT traders and wonder if the incentives were changed if the activities would modulate.

As it happens, this fishtails nicely into Jaron Lanier’s discussion about the internet in general, in Who Owns the Future? In that book Lanier suggests that modifying incentives (he gives possible ways to do that) would make a different landscape for those eager to participate in the economy. Financial remuneration is not the only incentive attractive to human beings. After all, how much can one person spend? On the other hand, the accumulation of vast sums of money in the hands of a few can cause major societal disruption. This is not simply a case of ill-gotten funds as in days of old. Computers have changed a lot of things, and the changes are exponential.

It’s a new world, and Lewis excavates a small corner to reveal talented folks beavering away at the underpinnings of our, and the world’s, financial pillars. This was one heck of a fascinating wake-up call.


The NYTimes Sunday Magazine on 4/6/14 had pictures of the IEX staff and Brad Katsuyama and a short synopsis of the whole story. The book is better, but time is money.
Profile Image for Trudie.
520 reviews552 followers
January 28, 2019
Michael Lewis really could write a 700 page expose on corruption in the paperclip industry and I would be lining up to buy it. He is the only person that can make a page-turning experience out of the shadowy world of high-frequency trading (HFT).

Lewis recruits the perfect guides to help him unlock the smoke and mirrors games played in the unfathomable complexity of the US stock exchange. In this book (and almost all Lewis' books) the geek, the social outcast, the whistle-blower, the introverted computer programmer are the unsung heroes and their individual stories are the true heart of the book. I admire how well Lewis brings to light the work of these analytical thinkers, the people whose passion is data and code and elaborate financial puzzles, the ones that use their skills to do good rather than use it to make billions of dollars off ignorant investors. In that regard Flash Boys is a heart-warming story.

In another light, it is a science fiction thriller where HFTs are top level predators living in murky pools committing "dark pool arbitrage" on slow moving, unwitting investors who have been lured into these pools by large Wall street banks. Luckily a Canadian comes to the rescue. Brad Katsuyama recruits a band of misfits and geeks and sets out to expose these predators and shame the banks. He sets up his own clean and transparent pool where the rules are clear for everyone and predators are held at bay, it becomes a beacon for the way Wall Street should work and a naughty boy called Goldman comes forward and closes his own dark pool and begins on the path of reforming his bad ways (maybe my own wishful thinking on that last part).

Which ever way you read it, it's a great story.
Profile Image for Andrew Smith.
1,035 reviews568 followers
May 18, 2015
I gave this a decent go - about 25% of it - but I just couldn't get past the fact it's just way too slow and much too boring. It's also very technical, in terms of explaining how high-frequency trading in the US equity market was rigged. And though the author takes time to try to explain it, the explanation is so protracted and woven into discussions between various brainiacs that I lost the will long before I fully understood what was going on.

Not for me I'm afraid, I gave up on this one.
Profile Image for Robert.
16 reviews112 followers
June 28, 2015
Excellent. Reads like a novel but is all real. There is a lot of detail and a lot of characters. I have not read any other book from Michael Lewis but if this is his style it is worth recommending. Its amazing how everything collude and how the small don't stand a chance. You cannot argue that alongside politicians, bankers and money brokers everywhere (not just wall street) are in this world for themselves (with few exceptions) no matter what, but I guess that is nothing new.
Profile Image for Mal Warwick.
Author 28 books392 followers
April 6, 2017
Bestselling Berkeley author Michael Lewis has been spending a lot of time in the East lately. After researching and writing his blockbuster fifteenth nonfiction book, Flash Boys, currently the country’s #1 best seller, he’s now juggling interviews and appearances triggered by the fallout. I can’t recall any book that has ever before struck such fear into the denizens of Wall Street.

Flash Boys tells the tale of the arcane and long-secret phenomenon known as high-frequency trading (HFT). The book reads like a thriller, showcasing the author’s legendary writing talent. Like the best fiction, it’s centered on people, not abstract processes or institutions, and the prose sings.

As Lewis discovered, HFT is one of the ways that Wall Street cheats investors — and not just small-time investors like you and me, but also the elite folks who manage multi-billion-dollar pension funds and mutual funds (and thus, indirectly, us as well). Initially, the practice was limited to a handful of traders working in small, independent shops, many of them Russian immigrants with advanced degrees in math or science. However, in the course of Lewis’ exploration of this complex and clever technique to game the system, he learned that many of the big Wall Street banks bought into the process as well and gained enormous profits as a result. All together, Lewis assets, HFT has robbed the investing public of billions of dollars.

HFT is no more than a computer-age version of the way Paul Julius Reuter made his name a century and a half ago by using telegrams and carrier pigeons to get the news to the London Stock Exchange faster than anyone else. (The result, of course, was the Reuters agency, now Thomson-Reuters Corporation.) By using obscure techniques to learn the intentions of unsuspecting investors milliseconds ahead of everyone else, HFT traders move the market up or down almost instantaneously, buying the investors’ stock at lower prices or selling to them at higher ones. Lewis refers to one HFT company that operated for five years without losing money on any day. (An HFT firm doesn’t invest; it only trades, ending each day with no stock in its name.)

Lewis’ hero is a brilliant young Canadian named Brad Katsuyama, who for many years was head of electronic trading at the little-known Royal Bank of Canada office on Wall Street, earning $2 million a year. In 2008, Katsuyama discovered that the quotes on his ticker tape didn’t reflect the reality of the market, and he set out to learn why. Over the course of two years, by hiring disgruntled veterans of HFT and grilling them endlessly, he came to see better than anyone else how the contemporary stock market really works — and he didn’t like what he saw. Not at all. HFT wasn’t “nice.” He was a Canadian, after all.

Ultimately, the result of Katsuyama’s investigation was a new stock exchange he and his colleagues designed expressly to frustrate HFT traders and assure investors of fair treatment. It’s called IEX (“A market that works for investors”).

Investing in the stock market used to be simple and straightforward. There were two stock exchanges — the New York (NYSE) and the American — and the “over-the-counter” market that ultimately morphed into NASDAQ. Prices on these markets were publicly reported through what was literally a ticker tape, only later transformed into an electronic ribbon at the bottom of computer or TV screens. (For penny stocks, which were thinly traded, you could turn to the “pink sheets” to find the current “bid” and “ask” prices. Having noted the price reported for a company you wanted to invest in (or sell out of), you called a broker and gave instructions to buy or sell that particular stock “at the market” or at a specified price (or, occasionally, under specific conditions). Your order went through, or it didn’t, but there was never any question that if it had been executed, the price was the best available. The rules were clear.

So, how did we get to the point today that there are thirteen public stock exchanges in the US and as many as 58 private ones, nearly all of which are vulnerable to the predations of HFT traders?

Blame the SEC.

As Brad Katsuyama learned early in his investigation, a well-intended regulation (“Reg NMS”) implemented by the Securities and Exchange Commission in 2007 was conceived to ensure that any investor would indeed receive the very best price in the market when buying or selling stock. For reasons Lewis explains but were too bizarre for me to retain in memory, Reg NMS inadvertently caused an explosion in the number of exchanges. As that number grew, so did a wide range of opportunities for nimble traders using super-fast computers and ultra-fast fiber optic cables to game the system.

Today the business pages and the business talk shows are full of rhetoric about HFT. Undoubtedly, there will be Congressional hearings before the clamor dies down. We’ll hear a lot of noise. However, as best I can tell, it’s not HFT alone, that’s the problem. Reportedly, the profits of the HFT firms have been falling sharply in the last few years as competition among them has mounted. There were reports as early as 2011 that the market was “over-saturated.”

Even if HFT is banned, as I believe it must be, the proliferation of stock exchanges could remain largely unaffected. (Some may be forced out of business, because huge proportions of their trading volume, and thus their revenue, comes from HFT.) To my mind, an equally pernicious result of Reg NMS was the growth of “dark pools” — the private exchanges housed within Wall Street’s big banks. Dark pools, it appears, are a latter-day technique for the banks to make greater profits at the expense of their customers. In other words, the biggest problems Michael Lewis brings to light was the result of decisions made — again — by the senior leadership of the banks that are “too big to fail” — not by a handful of amoral HFT traders on the margins of the market. (No, they didn’t learn a thing from the disaster of 2008.)
Profile Image for Dianne.
556 reviews890 followers
August 10, 2014
Really well-done non-fiction that reads like a fictional thriller. Michael Lewis humanizes his expose of high-frequency trading and the state of the U.S. stock market by focusing on a few key characters and their stories. There is a lot of financial information to grasp here, but Lewis is an absolute master at sensible analogies that transform extremely complex transactions into ones that are easy to comprehend.

Very disheartening on one hand - human nature at its worst - and at the same time uplifting - there are still good guys out there looking out for us. Highly recommended reading - I'll bet most people aren't aware of what is going on in our markets and how scary it is.

One tiny footnote on page 164 that cracked me up - when the "hero" of this book, Brad Katsuyama, creates a new trading exchange dedicated to institutionalizing fairness in the markets, he names it the Investor's Exchange, which was shortened to IEX. The owners, "in the interest of clarity, had hoped to preserve the full name but they discovered a problem doing so when they set out to create an internet address: investorsexchange.com. To avoid that confusion, they created another." (quoted verbatim from the book). You can't make this stuff up.
Profile Image for Scott Rhee.
1,815 reviews64 followers
May 4, 2016
Is there such a thing as an honest man on Wall Street? Insofar as greed and self-interest is a part of human nature and something that we all succumb to from time to time, Michael Lewis, in his book “Flash Boys: A Wall Street Revolt”, seems to think that the answer is “yes”.

In his latest critique on Wall Street culture, Lewis highlights the almost-accidental heroism of a handful of Wall Street insiders who uncover an insidious new trend in Wall Street that makes it easier for banks to steal lots of money from everyday investors---namely, people like us, anyone who has pension plans or 401Ks or IRAs.

I say “almost-accidental” because the heroes in “Flash Boys” never set out to be heroes, nor would they probably consider themselves heroes. They are just guys who noticed that the little guys were getting screwed by the big guys, and they decided to do something about it. If anything, “Flash Boys” is about refusing to stay silent in the face of bullying.

In one way, “Flash Boys” can be viewed as a semi-sequel to “The Big Short”, Lewis’s detailed examination of the 2008 financial crisis, an examination that uncovered rampant unchecked greed and corruption at nearly every level of the United States financial system, from investors to brokers to bank presidents to CEOs to politicians.

“Flash Boys” takes place several years after the events of the ’08 crisis. Things haven’t changed much. In fact, things are just as bad, if not worse, on Wall Street than they were prior to 2008; only now, technological advances have made it easier, and faster, to screw over people.

The primary figure at the heart of this drama is Brad Katsuyama, a mild-mannered Japanese-Canadian who works for the Royal Bank of Canada, one of the oldest and most prestigious banks in Canada.

Considered by his co-workers to be an upstanding, likable and honest worker, Brad wasn’t someone who liked to create or deal with conflict very much. He just liked his job and the fact that he could create a nest egg for his family, and he didn’t want to hurt anybody in the process. He wasn’t what one would call a boat-rocker, in the least.

So, when RBC transferred him to New York City, to work on Wall Street, at the tender age of 24, Brad felt like a small fish in a very huge shark-infested pond. To say that he quickly got educated is an understatement. Brad learned the ins and outs, the good/bad/and ugly of Wall Street.

Taking his knowledge back to Canada with him, Brad became a trader for RBC, brokering big money deals on a daily basis. On top of that, he also earned a reputation for being a straight shooter, partly due to decent upbringing but also partly due to a particular Canadian quirk of honesty: “The best way to manage people, he thought, was to convince them that you were good for their careers. He further believed that the only way to get people to believe that you were good for their careers was actually to be good for their careers. These thoughts came naturally to him: They just seemed obvious. (p. 27)”

So, when Brad started noticing that whenever he tried to buy and sell shares, the market seemed to react in a way that invariably made him lose money, almost as if the market was anticipating his actions and quickly changing in a way that guaranteed a loss for him.

At first, the IT guys were called in, thinking that it was a computer glitch or a problem with the software. They couldn’t figure it out.

So, Brad started researching the problem himself, which was especially hard since he had no computer or technology training. What he eventually discovered was what is currently referred to as high-frequency trading (HFT), a new up-and-coming Wall Street technology that enabled a very select few who possessed it to gain an unfair advantage over those who didn’t have the technology.

I won’t pretend to completely understand the technical stuff (Lewis does a decent enough job explaining it all in layman’s terms, although one probably needs a degree in computer science to fully understand it), although it essentially deals with the use of fiber-optic cables that give HFT traders a jump of mere milliseconds and nanoseconds on big-money trades. One wouldn’t think that milliseconds would matter much, but in the high-frequency trading world, they matter greatly.

There’s also these things called “dark pools”, which---if I understand it correctly---are secret underground markets that may very well be ruling Wall Street. I’m not sure exactly, but they sound like the “shadow government” equivalent to Wall Street. Pretty creepy, scary stuff. No one really knows much because their very existence is well-guarded, and they are impenetrable.

Anyway, Brad ran with this new knowledge and essentially formed an “A-Team” of mostly computer geeks and Wall Street outliers to figure out how to circumvent HFT and give investors an equal footing in the market. There result was called Thor, a tool that basically “slowed down” HFT long enough for normal traders to have a chance in the market.

Brad eventually started a new company called IEX, which created a dark pool of his own. Of course, unlike other dark pools, which are evil, Brad’s dark pool was created only for good. Seriously, though, IEX’s selling point was that it was basically meant to create a level playing field for all traders so no traders would have an unfair advantage over others. Since its inception in 2012, IEX has become extremely successful, especially among the “old” banks like Goldman Sachs, who never really had a chance against the HFT.

“Flash Boys” is, like “The Big Short”, riveting and intense. It reads like a techno-thriller, made all the more crazy by the fact that it is nonfiction.

Lewis has already become one of my new favorite nonfiction authors. I literally can’t get enough of his stuff...
Profile Image for John Stein.
103 reviews2 followers
April 8, 2014
Love Michael Lewis and his narrative style, but think the hyperbole and indignation have gone a little overboard here. I am no fan of HFT and they are definitely a thorn in my professional side, but the HFT problem is just noise. The heros/victims in the book are mostly firms that used to take 4-6 cents per share as commissions, and make even more for positioning trades, who now take 1-2 cents per share and maybe give up half a cent to the HFT shops. The argument goes something like "it isn't fair that a bunch of anonymous brokers are gaming the system and not letting RBC gouge my client as much as I used to". Look trading isn't "free", but it is a lot cheaper than it used to be. Despite what techno-utopians say there is still friction costs and always will be. It is a lot cheaper than it used to be. That said, for retail INVESTORS transaction costs of buying, holding, and occasionally trading US stocks, cost have never been lower and the market has never been fairer. People who think they can make money actively trading and mostly deluding themselves. It would be nice if wall street firms and brokers were more honest with their clients about the rebates and real trading costs but as Adam Smith said "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest"

Profile Image for Jane Stewart.
2,462 reviews837 followers
April 13, 2014
Wow! Fantastic! I loved it! Entertaining.

It has a guy Brad who is my hero. It reads like a John Grisham novel, but it’s a true story about stock exchanges, high frequency traders, and dark pools. The author is great at explaining complicated technical subjects and telling a good story around them. In the middle of the book I was so angry at the rip-off of investors, I was thinking of writing letters. But by the end of the book, I didn’t have to. Some good things happened. And now, various government agencies are investigating the problems described in the book - SEC, FBI, CFTC, FINRA, NY attorney general, and US attorney general.

The audiobook narrator Dylan Baker was excellent.

Narrative mode: 3rd person. Swearing language: strong, but not often used. Sexual content: none. Setting: 2002 - 2013 U.S. Book copyright: 2014. Genre: financial nonfiction.
Profile Image for Rick.
102 reviews231 followers
April 3, 2014
Fascinating, terrifying account of how the equities markets have been systematically undermined in the last 7 years. Essential reading to understand the state of the public markets today.
Profile Image for Kirsten .
1,584 reviews254 followers
January 4, 2015
I found this incredibly readable for a book set in the Wall Street and having to do with high frequency trading. I read it as part of my Good Reads Challenge: https://www.goodreads.com/user_challe...

I found this book as a choice in the Kindle Unlimited library so I decided to try it. The author not only makes things clear and readable, but he also makes people that I wouldn't normally find sympathetic and likable exactly that.

I was flabbergasted that there are ethical and open and transparent people working in Wall Street. Brad Katsuyama is a smart and admirable man.

I was pleasantly surprised by this book and would recommend it to others.
Profile Image for Dianne.
228 reviews41 followers
May 27, 2017
Michael Lewis has gotten to the absolute core of how the stock market works, to the nitty-gritty of the little black boxes that make the flashing connections, to the advantages and disadvantages of fibre optic over microwave signals. The mechanics of the stock market are explained in depth in this study of the American stock market. Liars' Poker written in 1989 was a good lead up to Flash Boys. Lewis has worked as a broker and has shone light on the dealings which the brokerage firms and the big Wall Street banks keep hidden from investors.

Flash boys, high-frequency traders, need the speed of a signal faster than light. There are a million microseconds in a second. The speed of the information measured in fractions of milliseconds makes a difference in who gets the stock offer first. The majority of the high frequency traders do not understand the technology of fibre-optics, only that they must have it and here is where Vladimir and the other Russians step in. The code written for the instructions of moving the trades/information through the glass fibre-optic cables and boxes was being written mainly by Russians. They laughed at the Wall Street traders' ignorance in Math. It was brokers from the Royal Bank of Canada who explained to heads of the big American banks what was going on in the HF circle of traders. Particularly interesting in the uncovering of the system being used was the group nicknamed the Puzzle Masters: these people were hired to find out how the high-frequency traders had configured their systems to deceive, redirect and exploit legitimate investors. Lewis refers to the HF traders as predators who use small blocks of 100 shares to bait their prey. I like another analogy Lewis draws, that of trading to playing poker. These guys are into big stakes gambling with huge amounts of money. Lewis has described a “corrupt and sinister system, a system without morals where the customers, the investors are unaware of the ways in which they have been abused.” This high frequency speculative way of operating is literally robbing pension funds; it also can result in a crash as it did in 2008.

Much of the book relates to the development of the IEX exchange, whose honourable goal was to show investors how their trades were transacted by being transparent. Brad Katsuyama, the director, thought some of the other 44 stock markets would follow suit and design a clearer view of their systems. Not so, they wished to keep their investors in the dark. The big banks also shunned this new exchange and forbid their management from trading with IEX thereby attempting to starve them out of the market altogether. Meanwhile the other 44 stock exchanges found ways to "cook their own flattering statistics. It's an entire industry that over glorifies data, because data is so easy to game, and the true data is so hard to obtain." Michael Lewis's books are observations made by a very wise man, well worth the time spent in reading them. "The system has let down the investor. It's shocking to see how the banks are colluding against us." It seems to me that much of the trickery that occurred was happening because the justice system knew very little about computer programming. Surely things have changed in part due to the investigation done by Michael Lewis in researching for his book Flash Boys. This investigation even involved a mountain biking adventure in the Appalachians, climbing over a fence with a warning sign posted on it and climbing up a tall microwave tower. Mr. Lewis's explorations into the schemes hidden within the world of trading have brought some much needed transparency.
Profile Image for Agnė.
747 reviews58 followers
July 4, 2015

“Flash Boys: A Wall Street Revolt” by Michael Lewis is both an infuriating and uplifting true story about the U.S. stock market corruption in the twenty-first century and a handful of extraordinary individuals who, instead of benefiting from the rigged system like everyone else on the Wall Street, are willing to go to war to fix it. Inspired by an obscure trial of Russian computer programmer Sergey Aleynikov who worked for Goldman Sachs, Lewis investigates the shadiest corners of the U.S. financial world - a secret fiber-optic cable route, high-frequency trading, front-running and dark pools - all the while weaving an inspiring tale of brilliance, dedication and morality.


1) Illuminating.
The importance of the “Flash Boys” cannot be emphasized enough as Lewis sheds some light on the issues of the U.S. financial world that are affecting millions of people but have been known and understood by only a few. What is more, the author not only points out the problem and the culprit but he also offers an effective solution and a glimpse to a promising future.

2) Well-explained.
Concepts discussed in the “Flash Boys” are technical and quite complex; however, Lewis explains most of the things very clearly and uses a lot of illustrative examples so that even the readers without any previous knowledge of or interest in the stock market (yup, that’s me!) can understand and appreciate the book.

3) Compelling.
Who would have thought that a business book can also be quite entertaining and full of colorful characters? The protagonists in “Flash Boys” are nothing short of the Avengers: each of them is a genius in his own way and all together they make one heck of a team. Thanks to Lewis’s skillful narration, the characters seem genuine and easily relatable, and their stories are personal and very engaging (I especially loved the chapters on Aleynikov).


1) Too long.
Although “Flash Boys” is an engaging read and its message is extremely important, it clearly has too many pages as the second half of the book is a little bit repetitive and the story starts to drag.

2) Complicated.
Sometimes I would be confident that I got the concept right, and then a couple of pages later the author would use different words to describe the same thing throwing me off completely. Admittedly, the subject is complex; thus, reading “Flash Boys” requires your full attention to keep all the facts straight.

3) Disappointing epilogue.
It’s a shame to end such an important story with such a weak and vague epilogue. It is neither a satisfying summary nor a clear future direction; it’s not even a worthy chapter on its own, let alone a proper ending of the book. If you have a chance, read “Flash Boys” in a paperback because the paperback edition, unlike the hardcover, has a GREAT afterword that shows the impact this book had after its publication. Honestly, the afterword makes the whole book better.

VERDICT: 3.5 out of 5

“Flash Boys: A Wall Street Revolt” by Michael Lewis is a game-changing business book containing engaging stories and compelling characters. Despite the complexity of the subject, most of the concepts are well-explained (though it could have been done in less pages) and the new afterword in the paperback edition more than makes up for the vague and unsatisfying epilogue.
Profile Image for cory.
168 reviews8 followers
April 1, 2014
while this was an interesting and well-written read, it seems to be severely lacking in evidence and more akin to an attempt to shift public opinion for the benefit of certain interested parties.
the starting premise is that brad thinks hft is bad, and from there it's just assertions and statements like "see, we found out this or that kind of thing is happening, i told you hft is bad" without really explaining what is bad.
seems like a thinly veiled ad to drum up business on the "fair" exchange.
the problem statement of this book might as well be "people who are in business do stuff to make money and that is evil."
trade on my "fair" exchange instead, where i'll also... make lots of money
Profile Image for Todd N.
336 reviews234 followers
May 31, 2014
Oh, Michael Lewis, thank you for churning out book after book of respectable pornography for frustrated middle-aged white collar geeks like me.

It's quite a trick you do: introduce us to a well-educated, likable but somewhat ornery freethinker who winds up following a hunch after noticing something that doesn't quite make sense.

Then this hunch leads our freethinker to assemble a team of still more well-educated, likable but somewhat ornery freethinkers -- a team that lays bare either (1) a hidden semi-sinister array of forces lurking in some complex system like the financial market or (2) the folly of some mass delusion that no one bothers to question or is incentivized to question.

And, finally, over the course of this journey of discovery and freethinking the team and its leader/hero become not only financially successful, but they gain the admiration of their peers. Or at least the admiration of the author, which is a million times better.

These books hit the spot so well, though they are dangerous to listen to while driving on Route 17 to Santa Cruz because my eyes kept rolling back in ecstasy, which would cause me almost to crash into a redwood tree on my way to work.

Even though Flash Boys feels a tad rushed out the door, as if another go-around with a copy editor would have tighten things up a bit, Michael Lewis has really perfected the white collar porn genre with this one.

In this case our hero is Brad Katsuyama, a perfectly nice and perfectly Canadian guy, who notices a glitch while trying to buy large amounts of stock for his corporate overlords.

At first he assumes it's a software bug, but like some Canadian-Asian white-collar Encyclopedia Brown he eventually sleuths out a multi-billion dollar front running operation known as high frequency trading, which accounts for over half of the stock trades in the US market.

It's sort of like noticing that your mail takes a few extra hours to arrive one day and then discovering the existence of an entire secret postal system (a la The Crying of Lot 49).

We then get introduced to the rag tag team he assembles: puzzle solving champions, taciturn Afghanistan veteran programming whizzes, borderline obsessive product managers, assorted financial types, and (most importantly) an Irish networking genius.

Way back in the late 90’s I worked for a company that helped build some of the early Internet content distribution networks, so I’m familiar with the early versions of the networks that these HFT guys are fighting over. This is where I learned that a good networking guy is worth his weight in gold. You just sort of give them whatever they want, don’t ask too many questions, and let them waddle off and do their thing.

Once the networking guy gets involved Brad and company really start to understand why microseconds and a few thousand feet of fiber optic cable make a world of difference to the financial guys and their trades.

The network the part of the system so obvious that you don’t even think about it between your E-trade account and the balkanized trading exchanges and dark pools spread all over New Jersey and New York.

So it turns out that the financial system of the past decade or so basically has been the plot of Superman 3. You know, the one where Richard Pryor figures out a way to divert all the fractions of a penny into his bank account in order to become a billionaire.

It’s like that in the sense that the HFT guys are getting a small piece of each transaction in a way that adds up.

But it’s also like the beginning of Time Cop where that guy goes back in time during the Crash of 1929 to buy up a bunch of stocks until Van Damme throws him out the window. By putting your computers closer to the exchanges than anyone else and making complicated orders designed to extract information about trades (while taking no risk), you are essentially going back in time and making risk free stock trades like the guy in Time Cop.

These firms are very secretive, but Mr. Lewis tells us that over years and years of doing business, HFT firms have lost money only a handful of days, and actually on most days they end up with no position in the stock market at all. It sort of boggles my mind.

The only real systemic risk that they take (and weirdly this isn't explained until the epilogue) is exposure to the whole market going down at once. And that can easily be avoided by having the fastest connection to the futures markets in Chicago. That’s why the whole first section of the book is about Spread Networks, I guess. (Again, one more pass by an editor would have really helped this book.)

But now here is where the post-coital haze clears and I start to question things. I have a bit of trouble seeing Brad and co. as underdogs. They seem nice enough, and I would certainly love to hang out with them and work in an office with them. They are making millions of dollars a year, which I don’t begrudge them at all, but that sort of disqualifies any underdog status right there.

And when they quit to start their own exchange, that’s not too unusual out here in the Valley, so I have a hard time seeing much drama in that. Going around and getting funding and self-capitalizing is a pain, but according to my Twitter feed it’s what all the cool kids are doing these days.

And while I get that a lot of people are getting ripped off by HFT, I don’t really feel like I am all that much. I buy and hold for long periods of time in stock funds. I guess those funds have to trade, but they hold for a long time too. It’s a very small drag. It’s really the stupid funds that churn a lot that are getting hit, but they charge such high loads anyway that they are already a rip off. Day traders are getting ripped off too, but they are so stupid that to get ripped off only a few cents would be a blessing for them.

However I admire Brad for pointing his business plan right at the heart of the HFT “industry” if you can even call it that. HFT is ripe for “disruption” as we say out here, considering that they add no value and (from what I can tell as a non-expert) it is barely legal front running of stock trades. Let’s put this way: Goldman Sachs decided that it was too unsavory to get into this business.

I guess what I’m saying is I’d rather this book told the story from the angle of a really really interesting business case study with lots of cool financial side bars rather than having the narrative forced into some kind of David v. Goliath mold. But then again I’m not the best selling author with the book that was made into an Oscar winning movie...

That reminds me. There is a very stupid article on Slate trying to defend HFT and call out Brad as a lackey for billionaires, but that is clearly nonsense. I’m not even going to take the time to find it and link to it.

It’s definitely worth reading if only because it’s been several weeks since you’ve read that the foundations of democratic capitalism is completely rotten to the core and you needed another reminder. You might as well buy it and read it before the next giant scandal or recession hits and makes you forget about this relatively minor bump. You never know when that will be. It might be around the corner. GDP already contracted in Q1, you know...
Profile Image for Elaine.
777 reviews358 followers
May 23, 2016
Not all problems are equally deserving of moral outrage and high dudgeon, but it seems that Lewis only knows how to write at one pitch these days. Whatever the rights and wrongs of high frequency trading are, it's not the mortgage market (which Lewis treated in the Big Short), and it's really not a populist issue (although Lewis does his best to whip up a frenzy at the injury to Mom and Pop, it's entirely unclear that Mom and Pop play any role in this story at all - this is really a story of banker on banker violence, which might be interesting enough but doesn't lend itself well to Lewis's bad guy/good guy view of the world).

In trying to create a popular story with well-demarcated heroes and villains in the very complicated world of HFT and alternate trading platforms, Lewis oversimplifies and doles out white hats and black hats quite liberally. It seems like everyone of Lewis' heroes had a defining 9/11 moment (of course they did!), and then became a maverick crusading for change on Wall Street (where change does not mean marching with Occupy, for example, or taking on inequality (ever notice that there are no women in Lewis' books? There are still not MANY women in the world he writes about, but there are enough that it is noticeable that no women get speaking parts in the book - not even the wives of any of his heroes). No, change here means building a better trading system, again portrayed as populist and revolutionary, but undeniably a for-profit enterprise funded by big money and looking to compete with the Wall Street big boys for trading profits.

I have no quibble with the story-telling or with the urge to make the difficult to understand understandable. I just find the tone of high moral dudgeon tiring in its unvarying intensity. I also find it disturbing that the book is so one-sided. I understand that most employees of big institutions probably can't talk to Lewis, but I think a good investigative reporter would have challenged his own sources a bit more and tried to dig a little deeper (rather than being content to be so breathlessly infatuated with his "heroes").

And the payoff? Well, no spoilers, but let's say that because the book catches up to the present before the story really has time to play itself out, there is no real ending, it just sort of tails off in media res.
Profile Image for Abhinav.
272 reviews249 followers
August 5, 2014
"The only thing necessary for the triumph of evil is for good men to do nothing." - Edmund Burke

So the suspicions were right, it would appear. The US stock markets were rigged, controlled by a select few individuals. And if not all, atleast some of the biggest guys on Wall Street were in the know, actively participating in this money-spinning venture. Perhaps this whole scheme would have gone on indefinitely, swindling big & small investors alike of billions unless someone stood up for what was right.

And the few good men did. Brad Katsuyama & his motley bunch of Wall Street misfits - an eccentric outfit by all means - decided it was time for things to set right, to give everyone a fair chance to prosper in the market. "Flash Boys" is their story - not dissimilar to "Moneyball", another of Michael Lewis' books (about the baseball team Oakland A's) - a story about taking on the big boys while enforcing a systemic change in the way the game is played.

Given the often-mediocre kind of books that are peddled in the name of being a "bestselling sensation" nowadays, it is difficult not to be skeptical when such a book comes along. However, if there was a book that deserved this moniker, "Flash Boys" would indeed be a strong contender if not a clear winner.

Michael Lewis is a wonderful storyteller - for what matters the most in his books is the story itself & the rest is pretty much secondary. For even a common reader who has no background in understanding financial markets will not lose track of the engrossing tale Lewis attempts to delineate - the motives behind the actions of every individual who either tries to support or suppress the initiative by Katsuyama & co. Even the sorry tale of the Russian computer programmer Sergei Aleynikov, whose arrest made headlines a few years ago (and eventually inspired the writing of this book), is symptomatic of the underlying problems of the US financial framework.

Even though "Flash Boys" is not the kind of book I'd usually read, Michael Lewis' powers of narration are what make it a triumph. So even if the business books genre doesn't strictly fall within the realm of your tastes, this one deserves a strong recommendation solely because at its very essence, it is the good ol' David versus Goliath tale in the backdrop of Wall Street.
Profile Image for Paul.
2,113 reviews
July 4, 2015
The days of men in the bear pit screaming prices at each other are long gone in the stock markets, now days it is all controlled by computers. These are so valuable that they are hidden well away and guarded by heavily armed men, and not even the experts know exactly what happens in these dark pools.

Those that do know won’t tell either, as they are making an absolute fortune.

This market, that we have been assured is open and fair, is rigged. And the key that unlocks the money chest now is speed. These days when you place and order for shares it is transmitted to an exchange so you can carry out the transactions. Whilst this is really fast, there are guys called high frequency traders who see your order, and with their super fast networks buy the shares first before offering them to you for a few pennies more. They have almost no risk as they have a guaranteed buyer. All because their connection is that few seconds faster.

One man, Brad Katsuyama, sees this happening and decides to do something to try and make the markets fair once again. With and eclectic bunch of financial oddballs and misfits, he sets up his own exchange, IDX, that is not only transparent, but also has a declared set of rules. Lewis writes about the fight that he went through to become accepted in Wall Street, how banks still refused to trade with them, even when explicitly told to do so by their customers as they couldn’t take a cut from their high frequency traders.

Lewis does have a way of getting complex financial shenanigans across, and in this book he has a good go at it. But there is masses of technical jargon in here, and that does get in the way of the story of Katsuyama’s fight to have an open and equal market once again. It was worth reading though, just to see how rigged and corrupt the world financial markets are.
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