Wednesday, 20 August 2014
Last updated 40 min ago
Apr 3 2014 | 10:33am ET
Greenlight Capital’s David Einhorn was shocked by what Michael Lewis learned about high-frequency trading, the author said yesterday.
Lewis, whose new book Flash Boys has caused a media firestorm on HFT, said that even the savvy hedge fund manager didn’t initially understand how high-frequency traders had, in Lewis’ words, “rigged” the U.S. stock markets. When he found out, he said, “Oh my God. This I did not know,” Lewis told Bloomberg Television yesterday.
Einhorn, an avid poker player, and other large investors are like “dumb tourists” lured into a casino where the card games are fixed, Lewis insisted.
“It’s very clear people are being front-run,” he said.
Lewis book has caused an uproar, with legislators and regulators increasing their scrutiny of HFT, high-frequency trading firm Virtu Financial postponing its initial public offering, and recriminations lobbed in both directions. This week, AQR Capital Management founder Clifford Asness took to The Wall Street Journal editorial page to proclaim that HFT actually helps large traders such as his firm by making markets and lowering prices.
Lewis has defended his conclusions, arguing that the reaction to Flash Boys is similar to the one seen 11 years ago to his book Moneyball, on the general manager of the Oakland Athletics. That book, which brought sabermetric baseball analysis to popular attention, was initially ridiculed for its treatment of the statistical analysis that has since become the norm in the sport.
“The disruption to the industry that caused feels a lot like this,” Lewis said.
Aug 4 2014 | 7:42am ET
By now, U.S. and international subscribers have received their home or office delivery of the special 500th issue of Futures magazine. You can too!—a very special offer follows. The issue is the largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders. Read more…
The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
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