Michael Lewis, 'Flash Boys,' and '60 Minutes'

CNBC ^ | 31 March 2014 | Bob Pisani

[Lorianne]

Michael Lewis gave an interview to "60 Minutes" ahead of the publication of his book, "Flash Boys."

He alleges that the stock market is "rigged" by a cabal of high frequency traders, stock exchanges, and Wall Street firms.

He alleges that a lone fellow, a trader named Brad Katsuyama, figured this out and formed a new exchange, IEX, to combat abuses perpetrated against the investing community.

He alleges that high frequency traders are able to front run orders, which means they are able to buy in front of you and sell them back to you when you want to buy.

[blueunicorn6]

My Dad’s observation.....

“Whenever there’s big money involved, someone’s going to find a way to cheat.”

[Timocrat]

Already covered in “ Dark Pools”

[Lets Roll NOW]

Front running is not the biggest problem, the Fed pumping billions a month into the stock market to inflate the biggest bubble ever is the problem. When that bubble bursts God help us all.

[Road Warrior ‘04]

I seldomly, if ever, watch 60 Minutes, but happened to catch this part of the show. Interesting, mind blowing and disgusting come to mind.

[SueRae]

I watched it. Brad Katsuyama is my newest hero. He and his engineers figured out just HOW it was being done. Brilliant work. This is skimming, plain and simple. A penny here and there adds up over the millions of trades each hour. BATS is only one of them but I didn’t see them very active today, at least not on the small cap stocks I hold and follow. But they’re not the only one.

As a longtime retail investor, you could see it happening but could never figure out just how it was being done.

The new exchange is www.iexexchange.com.

I already called TD Ameritrade and asked why they weren’t on the subscriber list. I will be following up. I let them know that I will be moving my accounts to the first online brokerage that appears on the IEX subscriber list. I’m sick of this crap.

[The_Media_never_lie]

I already called TD Ameritrade and asked why they weren’t on the subscriber list. I will be following up. I let them know that I will be moving my accounts to the first online brokerage that appears on the IEX subscriber list. I’m sick of this crap.

Won't using limit orders and infrequent trading prevent the most of this abuse? I have done alright over the long haul by using this method. I always assumed it was the market maker skimming. In other words, in addition to the commission, there is the bid/ask spread that adds to the overhead.

[SueRae]

I found many, many times that I’d place a limit order AT the bid, only to have it hang there and move up 1 cent right after mine got in. I don’t consider myself a day-trader...but some of the stocks I only hold for a short time. Watching the 100 share lots trade back and forth on Level 2 with a 1 penny difference is like watching an all day ping pong game. Those pennies add up. And they are doing it to BIG buyers, not just we ‘little people’. an institution routing a bid for 50K or more shares, a penny makes a big difference.

[q_an_a]

If anyone was watching how gasoline prices have gone thru the roof, this story is one hint. Each day the change trading price is often in a penny or two, but over a five year span look at the destruction.

[Wyatt's Torch]

Right. And they are making millions of trades a day.

[Wyatt's Torch]

CNBC fight between Katsuyama and BATS Exchange President O’Brien. It pretty much shut down the NYSE trading floor as traders looked on the debate. Fantastic stuff:

http://www.cnbc.com/id/101544772

[Lorianne]

Great interview! Thanks for posting this

[Early2Rise]

Fed pumping billions a month into the stock market to inflate the biggest bubble ever is the problem The free market blamed for the flaws of central planning yet again.........