Flash Boys by Michael Lewis is a nonfiction novel about Wall Street and high frequency trading. The main character, Brad Katsuyama, realizes that something is wrong with the stock market. He is a trader for the Royal Bank of Canada and he notices that high frequency traders are intercepting his orders and buying up the stock before he can. He wonders how this is possible, but it comes down to the microseconds it takes for a trader’s computer to transmit the order to arrive at the stock market. The HFT (high frequency trading) companies pay large sums of money in order to have faster technology so they can rip off the slower, less informed traders. Brad and other RBC employees create a coding system called Thor to even the playing field. It’s purpose is to block out HFT from buying their bids before them by causing the trades to slow down.
Later in the book, Brad and some of his co-workers decide to boldly create their own stock exchange called IEX. They need an enormous amount of funding so they begin marketing their new stock market to big companies. They inform them of how they’re being ripped off by HFT firms and that their new exchange will even the playing field. Brad does this by hiring the best engineers, programmers, and brokers on the stock market with a promise that they will make the exchange fair for all. In order to stop the HFT they need to delay their orders by making the fiber optic cables loop around enough that it slows the time an order takes to be placed. The HFT have lost their advantage and IEX is almost impossible to find a loophole in.
In general this is a good book and I’d recommend it to anyone who has an interest in business, more specifically the stock market. The book was interesting and extremely informative on the inner workings of the stock market. Although there is little action in this novel, it manages to hold the reader’s interest throughout. Michael Lewis successfully teaches the reader about the stock market without overburdening the reader with facts and statistics. Personally, I found this book interesting because I plan on majoring in Finance, so it applies to what I’ll be learning in college.