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Monday, March 31, 2014

Money Bawl: Wolves on Speed

I've often wondered why the NYT constantly scoops itself, and discourages sales of its Sunday paper, by posting the most important feature from its Magazine a few days before print publication.   Now they've set some kind of record perhaps by already rushing online a massive excerpt from Michael Lewis's upcoming book "Flash Boys" on wolves and Wall Street and high-speed trading, which appears in next Sunday's edition.  An except from the excerpt:
In the fall of 2009, Katsuyama’s friend at Deutsche Bank mentioned this Irish guy who seemed to be the world’s expert at helping the world’s fastest stock-market traders be faster. Katsuyama called Ronan Ryan and invited him to interview for a job on the RBC trading floor. In his interview, Ryan described what he witnessed inside the exchanges: The frantic competition for nanoseconds, clients’ trying to get their machines closer to the servers within the exchanges, the tens of millions being spent by high-frequency traders for tiny increments of speed. The U.S. stock market was now a class system of haves and have-nots, only what was had was not money but speed (which led to money). The haves paid for nanoseconds; the have-nots had no idea that a nanosecond had value. The haves enjoyed a perfect view of the market; the have-nots never saw the market at all. “I learned more from talking to him in an hour than I learned from six months of reading about [high-frequency trading],” Katsuyama says. “The second I met him, I wanted to hire him.”

He wanted to hire him without being able to fully explain, to his bosses or even to Ryan, what he wanted to hire him for. He couldn’t very well call him vice president in charge of explaining to my clueless superiors why high-frequency trading is a travesty. So he called him a high-frequency-trading strategist. And Ryan finally landed his job on a Wall Street trading floor.

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