Last night on CBS' 60 Minutes, Steve Kroft interviewed author Michael Lewis. Lewis' new book, "Flash Boys," looks at the subject of high-frequency trading, and presents Lewis' conclusion that the U.S. stock market is "rigged."

In the report, Kroft and Lewis discuss how virtually all trading is now executed by computers. A group of high-frequency traders, however -- which Lewis says includes many big Wall Street firms and stock exchanges -- have invested in technology that provides them with millisecond speed advantages that allow them to see and act upon stock market prices and orders before others. "The insiders are able to move faster than you. They're able to see your order and play it against other orders in ways that you don't understand. They're able to front run your order," Lewis says.

In Flash Boys, Lewis tells the story of how Brad Katsuyama, a 30-year-old trader at the Royal Bank of Canada, became the first person to figure out how high-frequency traders were pulling this off. Katuyamama has since left RBC to start his own stock exchange called IEX. IEX, launched with the support of many of the Wall Street firms that had previously been being front-run by high-frequency traders, is designed "with built in speed bumps to eliminate the advantage of high-speed predators."

Check out the 60 Minutes report  Report here:

 

Topics