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Posts Tagged ‘Vanity Fair

Crime and punishment in high frequency trading

Theer is another fascinating article by Michael Lewis in the latest issue of the glossy magazine Vanity Fair, which is fast establishing itself as a must-read destination for students of folly, drama and malfeasance in the world of financial markets (no shortage of good raw material there). His latest piece chronicles the curious case of a Russian computer programmer named Sergei Aleynikov, who was prosecuted for stealing computer code when he left Goldman Sachs to join a rival high frequency trading  operation. Mr Aleynikov’s conviction was quashed on appeal, but only after he had spent a year in jail. The article is interesting not just for the human story that Michael Lewis unfolds with his characteristic verve, but also for the light that it sheds on the phenomenon of high frequency trading. (Students of the phenomenon that is Goldman Sachs will also find plenty of evidence to support their prejudices, good or bad).

Here is one passage from the long article:

By mid-2007……Goldman’s equities department was adapting to radical changes in the U.S. stock market—just as that market was about to crash. A once sleepy oligopoly dominated by NASDAQ and the New York Stock Exchange was rapidly turning into something else. There were now 10 public stock exchanges in New Jersey alone, all trading the same stocks. Within a few years there would be more than 40 “dark pools,” or private exchanges, one of them owned by Goldman Sachs, also trading the same stocks. (Why the world needed 50 places, most of them in New Jersey, in which to buy and sell shares in Apple Inc. is a question for another day.) Read the rest of this entry »

Written by Jonathan Davis

August 5, 2013 at 12:55 PM