Thank you, Michael Lewis

[scandal 951]

http://www.cnbc.com/id/101628594

Ari Rubenstein, co-founder and CEO of Global Trading Systems

Mary Jo White confirmed what everyone on Wall Street has been saying for weeks: Michael Lewis is dead wrong. Responding to a question about Mr. Lewis' controversial book, "Flash Boys," the SEC Chair told Congress: "The markets are not rigged … [they] are the strongest and most reliable in the world."

....

Suddenly, however, important market participants have begun to speak up and voice their opinions on high-frequency trading, and many have come to its defense. For instance, Clifford Asness and Michael Mendelson, both principals at AQR — the kind of institutional investor Mr. Lewis claims high frequency traders are cheating — wrote in the Wall Street Journal: "How do we feel about high-frequency trading? We think it helps us." Dozens of diverse industry voices, from commodities trader Dennis Gartman to prominent market researcher and strategist Larry Tabb, have agreed.

Wall Street is a data-driven industry, which is a problem for Mr. Lewis, because he provides almost no data in "Flash Boys" to back up his incendiary claims. The result has been a groundswell of opinion rarely seen on the Street, which brings me to the second reason I'm grateful for the publication of "Flash Boys." Now that many of us have banded together, the industry can talk about something that really matters to the financial markets: stability.

The modern market is far from rigged, but it's also far from perfect. Today, virtually all trading is electronic — a fact that not many everyday investors fully appreciate. In this all-digital marketplace, human error and technical meltdowns are a real concern. Incidents like the "flash crash" of 2010 (which the SEC determined was caused by human rather than machine error), the botched Facebook IPO, and Knight Capital's implosion, while rare, demonstrate the need for regulations that strengthen the marketplace and prevent these sorts of shocks and stresses.