Wednesday marked day four of Michael Lewis’ book tour fire-and-brimstone sermon on high-frequency trading, so today marks day four of our rebuttal. If only the level of emotion reached by Lewis during his interviews could be matched by an equal amount of accuracy, investors would be much better served. As we have said many times in this space, the equity market structure is broken and in need of a fix. Vilifying those playing the speed game masks the true issues, which are price discovery and the nature of risk transfer. The new market structure has simply changed the economic incentives of market making from a wider bid-ask to a speed advantage. Either way, the buyside must pay to have a liquid market at the ready.

Over the past few days, John Lothian News has spoken with numerous participants on all sides of the issue. We will be publishing a special report on HFT in the coming days, and we hope to get as many speakers on the record as we can.

Meanwhile, to show we can objectively address the issues by skewering all sides, please enjoy this list of the top ten things the HFT community has NOT said in its defense this week.

  1. The only rigging I do is on my sailboat, which I earned from my HFT trading profits
  2. IEX being the best dark pool is like being the best looking toad.
  3. Is it me or does Michael Lewis look like Jeff Daniels?
  4. I am not an HFT trader, I am just latency sensitive.
  5. Competition is good, except when it leads to 13 public exchanges and 40 dark pools.
  6. Didn’t the regulators set all this up? Yeah, they did.
  7. You know, I want to go back to the days when big bracket banks front-ran my orders. Much more fair.
  8. To paraphrase Otter from Animal House, “you can’t do that to our customers. Only we can do that to our customers.”
  9. I’m smarter than you, faster than you and doggone it, I’m a better trader than you.
  10. Oh for the days of the NYSE and Nasdaq duopoly.

Bonus: I’ve watched 47 hours of Michael Lewis interviews. Make him STOP!!

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