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Rekenthaler Report

Remember When High-Frequency Trading Was a Bad Thing?

Nothing has changed, except that the controversy has vanished.

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Short Memories
In 2014, Michael Lewis’s attack on high-frequency trading, “Flash Boys,” was No. 1 for three weeks running on The New York Times’ best-sellers list. Lewis argued that the stock market was “rigged” against small investors, because high-frequency traders (or HFTs) had access to data that others lacked.

The public outrage, to put the matter mildly, has dissipated. Six years later, the organization recommended by Lewis for its refusal to accommodate HFTs, Investors Exchange, accounts for a modest 2.5% of U.S. equity trading volume. Although the company retains its trading platform, it recently abandoned efforts to entice companies to list on its exchange, after attracting only a handful of companies. The revolution will be a long, hard slog, if it occurs at all.

John Rekenthaler does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.