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People Most Responsible for Reigning in HFT


Joe Nocera, NYT, MIchael Lewis’s Crusade, here.

So far, so good. But Lewis doesn’t stop there. To make his hero appear even more heroic, he casts Katsuyama as the only person on Wall Street to figure out the high-frequency trading scam, and the only person with the courage to do something about it. That’s not quite the case.

Nearly two years ago, Scott Patterson of The Wall Street Journal wrote a book titled “Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market,” which also exposed the scam. The book is structured remarkably like Lewis’s — Patterson’s got a heroic central character who learns the tactics of the high-frequency bunch and then acts on it by going to the Securities and Exchange Commission. Except Patterson’s hero isn’t Brad Katsuyama; he is Haim Bodek. When I caught up with Bodek, he groused about how Katsuyama had only part of the picture, and how there were other elements of high-frequency trading that needed as much if not more exposure.

Another critic of high-frequency trading who appears in “Dark Pools,” Dan Mathisson of Credit Suisse, actually thought up an electronic exchange in 2011 — long before Katsuyama — aimed at keeping high-frequency traders at bay. There are other companies that also make it possible for institutional investors to trade blocks of stock without being subjected to the abuses of high-frequency traders.

Clearly Mary Schapiro is Number 1, right? Then for number 2 I’m thinking its a tie between Bodek, Cuban, and Schneiderman. Is there anyone else even in the discussion? Brad Katsuyama, I’m not feeling it, it takes him like 75 pages to figure out there are multiple exchanges.



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