A year after his "Flash Boys" book rocked Wall Street, Michael Lewis thinks the stock market is still rigged.
Last March, the author ignited a prolonged, heated dedbate about high-frequency trading, which uses sophisticated computer algorithms to execute orders in fractions of a second. Lewis profiled Brad Katsuyama and IEX, which developed a system that seeks to level the playing field for investors.
In an essay for Vanity Fair, Lewis said the market's "invisible scalp" persists, even though regulators have taken action against several Wall Street institutions over the past year due to trading violations.
"The rigging of the stock market cannot be dismissed as a dispute between rich hedge-fund guys and clever techies," Lewis wrote for the magazine's April edition. "It's not even the case that the little guy trading in underpants in his basement is immune to its costs."
Lewis said he was both surprised at the intensity of the controversy since the book's release and disappointed that the furor against high-frequency trading hasn't become more widespread. He specifically mentioned a heated debate, televised live last April by CNBC, between Katsuyama and William O'Brien, the president of the BATS exchange, that virtually stopped Wall Street in its tracks.
Some supporters argue that HFT has helped lower trading costs while others say the only ones penalized are hedge fund managers whose frequent trades can get front-run by the lighting-fast systems. Lewis rejected both arguments.
As for Katsuyama, Lewis praised the way he has handled the firestorm following the publication of "Flash Boys."
"The controversy that followed the book's publication hasn't been pleasant for them, but it's been fun for me to see them behave as bravely under fire as they did before the start of the war," Lewis said. "It's been an honor to tell their story."
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