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Comment by tptacek | Hacker News Reader

Trust me, Patrick agrees with you about Flash Boys. If you haven't yet, read the followup/critique book he cited, even if you haven't read Flash Boys. It's fantastic and chock full of interesting technical details. It's way nerdier than Lewis' book.

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That's the "Not so Fast" book? I actually read that before flash boys. Somehow the narrative from flash boys had penetrated the NYT/Economist meme-spreading network and I had accepted it at face value.

However the microstructure book looks ... Deep - but I guess I need to decide if I am in or out :-)

It is, as I'm fond of saying, The TCP/IP Illustrated of Money. As with Stevens, it's a bit outdated, but still the best reference.

Well I will treat it as I did "TCP/IP illustrated" - buy the whole thing, read most of the middle one and keep it on the shelf for a few years nagging at me guiltily.

I have read Flash Boys but not the books written in response.

How do the other viewpoints explain why the IEX exchange was created and designed specifically to stop HFT? That is the central narrative of the book, and in Lewis's telling it makes complete sense as a way to save the common man from the evil HFT traders. But if Lewis got it all wrong and HFT is perfectly fine, why would a completely new exchange be set up to stop it?

There are hundreds, probably thousands, of little exchanges nobody has ever heard of. Why set one up to "combat HFT"? Because if you can convince companies to trade on it based on nebulous "anti-HFT" features, you can collect fees without having to compete with the major exchanges, who both bid prices down and also have a 100:1 advantage in engineering and support staff.

Believe it or not, that's not even the "cynical" answer.

There are about 40 active registered ATSs for trading US equities. It's a high number but it's not thousands.

There are many multiples more private exchanges, trading all sorts of electronically tradable instruments. I wasn't referring simply to stock exchanges. I was making a point about the return on investment you can get from developing a trading platform.

You should read the other books, but the short answer is that IEX was created not to save the common man, but to save the big block hedge fund traders.

There is a natural and good competition between HFT market makers who provide liquidity and big block traders who consume it. IEX is purpose built to advantage the big block traders at the expense of HFT market makers.

Note: neither side in this is good or evil, they are just natural opponents.

What I would say is dodgy is presenting yourself as "for the common man" when what you are doing is serving the common man up to hedge funds.

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