March 31, The new book comes out today. Everyone who owns equities is victimized by the practices, in which the fastest traders figure out which stocks investors plan to buy, purchase them first and then sell them back at a higher price, said Lewis, a columnist for Bloomberg View.

Officials at the U. Securities and Exchange Commission and Commodity Futures Trading Commission have also said market rules may need to be examined. Lewis is adding his voice to a debate that has obsessed the securities industry for almost a decade while only periodically surfacing in public via events such as the May flash crash, in which the Dow Jones Industrial Average posted an almost 1, point loss. Previous books by the one-time Salomon Brothers Inc.

His latest target, high-frequency trading, comprises a diverse set of software-driven strategies that have spread from U. While the tactics vary, they usually employ super-fast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies on more than 50 public and private venues that make up the American equities market.

High-frequency traders account for about half of share volume in the U. Exchanges rely on HFTs for profits as well as liquidity, with electronic market makers all but eliminating the old system of human floor traders who oversaw the buying and selling of equities. While critics such as Lewis see a Wall Street plot, proponents say the new system is faster and cheaper.

Bats Global Markets Inc. The platform, a dark pool with ambitions to officially become an exchange, imposes a delay of microseconds, or millionths of a second, on orders — enough to curb the fastest trading firms. IEX aims for greater transparency by making its trading rules available for public review, unlike some other electronic venues. While still at Royal Bank, he noticed that prices seemed to move against him when he was trading.

Katsuyama concluded that his intentions became visible on some exchanges faster than others. The most fleet-footed traders could take advantage of that by submitting bids and offers on the slower markets.

Flash Boys: Former RBC trader hero of Michael Lewis’s new book on how U.S. stock markets are rigged | Financial Post

I mean, I knew something was wrong. Eric Ryan, a spokesman for the New York Stock Exchange, and Nasdaq OMX Group Inc. This has helped make our market the most competitive and liquid in the world, greatly benefiting individual investors. Wall Street banks and rapid-fire trading firms pay for these services, providing millions of dollars in quarterly sales to exchanges and helping ensure their markets are supplied with standing orders to buy and sell stocks.

Bloomberg LP, the parent of Bloomberg News, provides its clients with access to some proprietary exchange feeds. The investigation threatens to disrupt a model that market regulators have permitted for years as high-speed trading and concerns about its influence have grown. High-frequency-trader Virtu publicly released its initial public offering filing in March. The New York-based market maker, which provides quotes in more than 10, securities and contracts on more than venues in 30 countries, said it had turned a profit every day except one for five years.

The company uses IEX. Virtu disclosed in the IPO filing that the U. Share volume totals show the transformation that high- frequency firms have wrought in American equity markets. While combined trading on the NYSE and Nasdaq rarely exceeded 2 billion shares in the s, today it is regularly three times that in the U.

The practice of selling enhanced access to brokers accelerated as American exchanges evolved from member-owned firms amid a flurry of regulation and computer advances in the s.

Among other changes, the government-mandated compression of stock price increments to pennies from eighths and sixteenths of a dollar, a process known as decimalization, squeezed profits for market makers and specialists that had overseen stock trades.

Faced with the need to maintain liquidity on electronic platforms where profits were too fleeting for humans to capture, exchanges encouraged computerized firms to post orders for investors to trade against.

U.S. stock markets are rigged, says author Michael Lewis | Reuters

Co-location and customized data feeds developed alongside the hodgepodge of fees and rebates that market operators use to keep speed traders coming back. These are areas we want to improve and fine tune.

Market-maker privileges have always been a hallmark of equity trading, starting with the sale of seats on the floors of exchanges. Results like those, as well as concern that NYSE and Nasdaq were too powerful, helped spur reforms since such as decimalization and a broader overhaul known as Regulation NMS that was aimed at lowering barriers to trading. Through rules mandating that any order for stock be routed to whoever in the country was transmitting the best offer to buy or sell, regulators hoped competition among a much larger pool of de facto market makers would lower costs for investors.

Senate in February Federal regulators have asked for years whether new restrictions were needed. Last year, the CFTC announced a review of speed trading and sought industry input. SEC Commissioner Daniel Gallagher said on March 28 that individuals are concerned that high-frequency traders detract from fairness in the marketplace.

Your account has been reactivated. You must verify your email address before signing in.

Check your email for your verification email, or enter your email address in the form below to resend the email. Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

Attention Print Newspaper Subscribers For verification of Print Subscriber offers e. By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy. Please confirm your details below.

Already have an account? Please check your inbox and follow the instructions to confirm your email address. Enter your email address below 2. Wait for the instructions to arrive in your inbox 3. Follow the instructions to update your password. We've sent an email with instructions to create a new password. Your existing password has not been changed. Sorry, we could not verify your email address. Please enter your email below, and we'll resend the instructions for email verification.

Thank you for verifiying your email address. Close is a division of Postmedia Inc. Privacy FAQ Change Password. We didn't recognize that password reset code. Please enter your email below, and we'll send you a new code to reset your password. We've sent you an email with instructions to create a new password.

All FP Tech Desk. Former RBC trader hero of Michael Lewis's new book on how U. Filed under News FP Street. Related Virtu Financial, the high-frequency trader who had just 1 day of trading losses in 1, days, files for IPO Declawing speed traders is goal of stock market revamp proposal High-frequency traders: Market friend or foe?

In this interview SmallCapPower, Berkwood Resources Ltd. Joe Mimran from Dragons' Den discusses his latest venture LXRandCo, Inc. Peter Pascali talks about the many uses for plasma technology, including in the fast-growing 3D printing industry. Mortgage Calculator Calculate your monthly mortgage payments.

Mortgage Comparison Compare payments and other costs associated with getting a new mortgage. Mortgage Qualifier Begin the process of finding out how much you can borrow.

Home Budget Calculator See how much you have left to save and where your money is being spent. Investment Calculator See how much your investment savings could be worth. Savings Calculator What will it take to help reach your savings goals.

Currency Converter Compare currencies from across the globe. How to be a Millionaire Calculate what it will take you to save one million dollars. Get the latest news in your mailbox as it happens.

Critical investor says he was snubbed by Cenovus CIBC shakes up management with retail head Williamson to leave. Canada bank stocks seen as a buying opportunity as premium to U. OSC imposes permanent ban on Garth Drabinsky's participation in Ontario capital markets How the dissidents got their way at Granite REIT after a bruising proxy battle. Watch 'Approach is unusual': A tale of two mines: One shovel in the past, the other in the future Booms and busts are the norm for mining towns, but a new model may ensure that no community ends up on life support.

Sunny Freeman and videographer Tyler Anderson report Sears Canada tanks after report it is preparing to seek creditor protection The court filing will likely lead to a liquidation, with the business sold off in pieces, sources say. Find Financial Post on Facebook. Classifieds Remembering Celebrating Classifieds Marketplace Careers FlyerCity Post a Classifieds ad Advertise With Us Partnerships Integrated Advertising Content Works Place an ad My Account Post Points Subscriber Self-Serve ePaper eNewsletters Stay Connected.

Unauthorized distribution, transmission or republication strictly prohibited. Site Map Contact Us. With your existing account from: Sign In Create Account. Sign in to your account. Create a new password. Sign in to complete account merge.