On “Sixty Seconds” (an old-media eternity) this weekend, the author of “Flash Boys”
explains how it works: “The complexity disguises what is happening. If it's so
complicated you can't understand it, then you can't question it.”
In countering
this “dark market” that serves brokers rather than customers, opponents found a
key ally in the resume of a Stanford junior named Dan Aisen, “Winner of Microsoft’s
College Puzzle Challenge,” an annual contest in 2007.
“There’s
some element of mechanical work and some element of ‘Aha!’ ” says Aisen, who
got a job and a nickname, the Puzzle Master, soon shortened to Puz, who helped dissidents
create their own stock exchange powered by a system called Thor.
It
takes patience and concentration to read through Lewis’ narrative and its
compelling conclusion that, when it comes to protecting customer interests and
their own, the most trusted names on Wall Street don’t hesitate.
Yet embedded
in its tortuous tale of cables twisting through a crucial few miles in
suburban New Jersey is more than another story about how in our society, speed
can not only kill but steal big.
“Taking
advantage of loopholes in some well-meaning regulation introduced in the
mid-2000s,” Lewis concludes, “some large amount of what Wall Street had been
doing with technology was simply so someone inside the financial markets would
know something that the outside world did not. The same system that once gave
us subprime-mortgage collateralized debt obligations no investor could possibly
truly understand now gave us stock-market trades involving fractions of a penny
that occurred at unsafe speeds using order types that no investor could
possibly truly understand.”
His
book is unlikely to bring down Wall Street’s rich and powerful, but it’s
comforting to know that the brain power of a college undergraduate is giving
them some anxious moments.
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