Charlie Rose, interviewing Michael Lewis on his new book The Flash Boys:
Rose: Any accusations about you?
Lewis: Yes. … The rap on me is easy. If the rap on me is: “I only tell one side of the story. I told brad Katsuyama’s story. I didn’t tell the high frequency traders’ story,” people don’t seem to grasp that I’ve actually gone and interview dozens of high-frequency traders and people at exchanges and in the banks.
I am telling the story through the eyes of these characters who are trying to figure out how the market works because they are teaching the reader how the market works in their own journey. But I am not ignorant of all the other points of view. There is a passage in the book that lays out what high-frequency traders would say in their defense. But there is not much to say.
Rose: What do they say in their defense?
Lewis: “Everything we do is within the bounds of the law.” “We add liquidity to the market.” When you hear a Wall St. person say liquidity, you should run for the exits. What does it mean? They add volume to the market, but so does a front-runner. “We narrow spreads.” They used to be much bigger, and now they are smaller, an indication of liquidity. But it is a deceptive claim because what narrows spreads is the technology.
…so it is not like I don’t know all of the other sides of the story. I’m trying to present the true side of the story. This is not on the one hand, and on the other hand story. No sane person would walk into this and say there are two sides to the story, and the other side is very compelling. The other side is not that compelling. There is a lot of predatory activity going on in the stock market. This guy went and figured it, and demonstrated in all kinds of ways. It’s breathtaking, you should know this.
I love this.