Flash Boys, is it really flashy? (1)

Michael Lewis is obviously a good writer, his book sells!  He was invited to give a talk on TV, his work has turned into a movie "The big short".  I bought the book "Flash Boys, Not so Fast" by Peter Kovac by accident, instead of Lewis' work "Flash Boy".  It was quite an eye opener.

Lewis is very good story teller, the whole book is condemning HFT traders (or firms), explaining they are rigging the market.  However, there is no concrete evidence or data proving his theory.  Every single trade done in any exchange should be logged.  I do not think it is impossible to find the data to show how much damage HFT has done.  But there is no such supporting document in his book.  All we know is he said "the profit HFT made over the years could be billions".  But from where?  How he reached this conclusion? 

People questioned regulators are part of the game hence they have more incentive to cover up with HFT.  I tend to disagree with this.  If regulators want to make money, they should ban HFT and keep the limited licenses for brokers and market makers (also insists all orders and matching should be done by human beings, human beings who they can have deal with, rather than servers).  That can maximize their profit greatly.  However, the result will be US stock markets lose liquidity and transparency.  No investments would want to get in, and slow down of the capital market movement.  The result no one wants to see.  Although I think regulators and governments are short sighted and greedy crooks, I suppose building a better, faster, more efficient market actually benefit themselves in a way that outweighs short-term gain.  For example, the recognition, sense of achievement and praise/envies from other capital market practitioners. 

In addition to the regulator side, I think exchanges, brokers and market makers are also have good incentive to comply.  It gets harder and harder to cheat since every single trade is logged and price information is so readily available for everyone.  There is no big profit to gain by cheating, why take the risk of losing your license.