“Score one for the humans! Critics of high speed, computer-driven trading have a new champion.
“Michael Lewis, one of the nation’s best known financial writers, takes on the topic of high-frequency trading — a strategy in which traders use computer algorithms to buy and sell stocks in the blink of an eye — in his new book.
“Flash Boys: A Wall Street Revolt,” in stores Monday, tells the story of how several insiders at high-frequency trading firms used speed and automation to gain an advantage over less technologically adept investors.
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“Dennis Kelleher, chief executive of Better Markets, Inc., a non-profit group that advocates for market transparency, blasted the regulator for failing to crack down sooner.
“The SEC has adopted a see-no-evil approach to the out-of-control computer trading on our markets,” he said. “For some reason, SEC staff seem enthralled with the fairytales of the HFT industry,” he said.
“These traders may only earn a fraction of a penny on each transaction, but those pennies add up to billions of dollars when the technique is repeated in rapid succession.
“Mutual funds and 401(k)s are losing a slice of some amount on literally every single trade,” said Kelleher. “We’re talking about vast sums of money traded by those entities on behalf of investors and retirees. That’s how Wall Street rips off Main Street every day.”
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Read full CNN Money article here.
