"Flash Boys"

[fiefoe]

The second half combined a detective story (with no actual bodies, and that's the type of detective story I like best) with a start-up story.

• “We had a saying that seemed to appease everyone when they asked why we are doing this,” he said. “We are long-term greedy.
• He couldn’t get the people who should give him money to do so, and he couldn’t take the money from the people who wanted to give it to him.
• “Disillusion isn’t a useful emotion,” he said. “I need soldiers.” Don was a soldier.
• Creating a new stock exchange is a bit like creating a casino: Its creator needs to ensure that the casino cannot in some way be exploitable by the patrons.
• The old Soviet culture also left its former citizens oddly prepared for Wall Street in the early twenty-first century. The Soviet-controlled economy was horrible and complicated but riddled with loopholes. Everything was scarce; everything was also gettable, if you knew how to get it.
• As if that weren’t squirrelly enough, the Post-Only order type now had many even more dubious permutations... A Hide Not Slide order was a way for a high-frequency trader to cut in line, ahead of the people who’d created the line in the first place, and take the kickbacks paid to whoever happened to be at the front of the line. The Puzzle Masters spent days working through the many order types. All of them had one thing in common: They were designed to create an edge for HFT at the expense of investors.
• As they worked through the order types, they created a taxonomy of predatory behavior in the stock market.
• To “see” the prices on the other stock exchanges, IEX didn’t use the SIP or some phony improvement on the SIP but instead created their own private, HFT-like pictures of the entire stock market.
• Coil the fiber. Instead of running straight fiber between the two places, coil thirty-eight miles of fiber and stick it in a compartment the size of a shoebox to simulate the effects of the distance.
• And yet Bank of America might refuse, on principle, to allow IEX to inform the investor that they had followed his instructions—on the grounds that doing so would reveal Bank of America’s secrets!
• they discovered a problem doing so when they set out to create an Internet address: investorsexchange.com.
• It was more that there hadn’t been even a moment when he had felt he didn’t know what he should do next. He’d been jarred into a new kind of awareness, and interest in the people around him, and he liked the feeling. His reactions had surprised him into an observation about himself. “I was impressed that I did not fall apart,”
• It was a little unsettling that the geeks who now ran the financial markets were also expected to have the nerves of a test pilot.
• In May, Nasdaq bungled the initial public offering of shares in Facebook Inc. because, in essence, some investors who submitted orders to buy those shares changed their minds before the price was agreed upon—and certain Nasdaq computers couldn’t deal with the faster speeds at which other Nasdaq computers allowed the investors to change their minds.
• The tech guys all wound up with this abused animal quality to them. “You just have to unabuse them,” Brad explained, “and let them know they aren’t going to be blamed just because something goes wrong.”
• How was it possible to pay hundredths of a penny for anything? Easy: High-frequency traders had asked for an order type that enabled them to tack digits on the right side of the decimal, so that they might jump the queue in front of people trying to pay $30.00.
• Although technically a dark pool, IEX had done something no Wall Street dark pool had ever done: It had published its rules.
• All the market activity within a single second was so concentrated—within a mere 1.78 milliseconds—that on the graph it resembled an obelisk rising from a desert.
• The less honestly a bank looked for P&G stock outside of its own dark pool, the less likely it was to find it. This evasiveness explained the banks’ incredible ability to find, eventually, the other side of any trade inside their own dark pools.
• The original false note struck by the big Wall Street bank—the act of avoiding making trades outside of its own dark pool—became the prelude to a symphony of scalping.
• Watching him string together sentences without profanity was like watching someone try to swim across a river without using his arms or his legs.
• The first different-looking stock market order sent by Goldman to IEX landed on December 19, 2013, at 3:09:42 p.m. 662 milliseconds, 361 microseconds, and 406 nanoseconds... just fifty-one minutes, Goldman had entrusted them with most of its orders for ten seconds or more. That trust had been rewarded: The market felt fair; 92 percent of those orders traded at the midpoint—the fair price—compared to 17 percent that traded at the midpoint in Wall Street’s dark pools.
• The relationship of the big Wall Street banks to the high-frequency traders, when you thought about it, was a bit like the relationship of the entire society to the big Wall Street banks. When things went well, the HFT guys took most of the gains; when things went badly, the HFT guys vanished and the banks took the losses.