Even so, the outrage and pushback from Wall Street (Lewis, unsurprisingly for a sales seeking author, has described it as a 'shitstorm') has been cacophonous, and it's easy to see why. Wrong perhaps, but technically above board, if only because the SEC rules actually oblige brokers to seek 'the best price' for a security. There may even be some prosecutions, though it is widely held that receiving trading data a few milliseconds ahead of someone else – which is the raison d'etre of HFT – is not very illegal. On the same day, the NYSE, now only one of the many exchanges driven by electronic trading, reported it had reached a $4.5m settlement with the SEC over related violations regarding 'co-location' – the practice of allowing HTFs to site their computers right next to the exchange's 'matching engine' so that information can be accessed more rapidly.Ĭloser scrutiny of these kinds of relationships is sure to follow, along with some new rules. His office recently announced that subpoenas were being sent out to exchanges as part of a probe into their relationships with the HFTs. Not to be upstaged, the New York state attorney general, Eric Schneiderman, threw his own white hat into the ring. For much of the past year, it appeared, the Justice Department, the FBI, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority had been investigating HFT firms and exchanges for violations of insider trading and other Wall Street rules.

In the wake of the book's launch in early April, several regulatory agencies rushed to disclose that they were already taking action. T he publication of Flash Boys, Michael Lewis's bestselling exposé of high frequency traders (HFTs) in the finance industry, could hardly have been better timed as a call for the Feds to step in.

Flash Boys by Michael Lewis