“A few nights ago, CBS’s ‘60 Minutes’ provided a forum for author Michael Lewis to announce that Wall Street is ‘rigged’ and for the sponsors of a new trading venue called IEX to promise to unrig it. The focus of the TV segment was high-frequency trading, or HFT, an innovation now over 20 years old.”

“The stock market isn’t rigged and IEX hasn’t yet generated a lot of interest. In our profession, what we saw on ‘60 Minutes’ is called “talking your book”—in Mr. Lewis’s case, literally.”

“The onslaught against high-frequency trading seems to have started about five years ago when a blogger made a wildly exaggerated claim about one firm’s HFT profits. Nowadays after any notable market event, and again last Sunday for no reason other than a book launch, the world gets bombarded with arcane details and hyperbolic assertions about HFT strategies. If you find the discussion overwhelming, we have some good news: The debate can be understood without knowing how equity orders are routed, matched or canceled.”

“Few professionals completely understand the details of market microstructure. Rather, when someone has a strong opinion about the subject, it’s likely to be what they want you to believe, not what they know.”

***

Read full Wall Street Journal article here.