Need to read: Flash Boys

Why everyone's been talking about this book on the latest trading technologies

Flash Boys

Michael Lewis

Allen Lane, 2014

Michael Lewis is one of the biggest names in business journalism and author of the bestselling Liar's Poker, now considered the definitive account of 1980s Wall Street, and a number of other highly-regarded works.

Meanwhile, the rise of fintech - the use of extremely sophisticated technology in the finance world - is one of the most important business trends to watch.

Flash Boys, published earlier this year, brings the two together.

What does it cover?

Essentially, the book tells the story of a small group of Wall Street players who noticed something going wrong in electronically-traded markets, and decided to do something about it.

As it deals with trading and technology, two very technical subjects, you might imagine Flash Boys would be hard going. But instead it's structured - and reads like - a thriller. Each chapter takes the reader one step further into Lewis's story of technology-enabled market-rigging on a grand scale and, more often than not, ends on a cliffhanger.

What can you learn from it?

The book's main message is how and why the finance world is now overwhelmingly driven by technology. As Lewis points out, the trading world of "alpha males in color-coded jackets stand[ing] in trading pits, hollering at each other", which many people still imagine exists, "is dead".

In its place is a hi-tech arms race, where market participants vie with each other to shave microseconds (millionths of a second) off trading times and regularly thwart each others' intentions, almost before they know what these are themselves.

But it's also striking how physical and recognisable this world still is. Lewis's book opens with a description of one of the underground fiberoptic cables that are at the book's core - "a one-and-a-half-inch-wide hard black plastic tube designed to shelter four hundred hair-thin strands of glass" that "had the feeling of a living creature, a subterranean reptile, with its peculiar needs and wants."

This cabling goes on to snake all around the book, a metaphor for the fact that, even in this new overwhelmingly hi-tech era for finance, very human traits like competitiveness, greed and deception are never far below the surface.

Top takeaway

The final chapter of the book features an enormous meal: "Vast platters of lobster and crab, steaks the size of desktop computer screens, smoking mountains of potato and spinach."

This sort of feast, Lewis says, was once cooked for star traders, but is now served to "a collection of weedy technologists, the people who controlled the machines that now controlled the markets." Worth bearing in mind if you're thinking about what kind of jobs to apply for in finance...