Canadian Brad Katsuyama in spotlight over 'rigged' markets allegation
Key Excerpts from Article on Website of Canadian Broadcasting Corporation
Posted: April 21st, 2014
A Canadian who works on Wall Street is emerging in some quarters as a hero for revealing the inner workings of high frequency traders who critics have accused of rigging the stock market and taking investors for billions. Brad Katsuyama now runs IEX the Investors Exchange a new Wall Street trading platform he founded. But it was in his former capacity as the head trader in New York for RBC Capital Markets that he caught the attention of popular financial writer Michael Lewis. Katsuyama gets star billing in Lewiss new book, Flash Boys: A Wall Street Revolt. Katsuyama told Lewis that he had uncovered the methods high frequency traders use to get what he considers to be an unfair advantage over other investors. Katsuyama noticed that when he would send a large stock order to the market, it would only be partially filled, and then he would have to pay a higher price for the rest of the order. When he investigated, he found that his orders travelled along fibre-optic lines and hit the closest exchange first, where high frequency traders would use their speed advantage to buy the shares he wanted and then sell them to him at a slightly higher price all in milliseconds. "They are able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price," Lewis told 60 Minutes. The United States stock market, the most iconic market in global capitalism, is rigged. The main thrust of Lewiss new book is that high-frequency traders use their speed advantage in predatory ways that end up cheating market participants small and large.
Note: For more on financial corruption, see the deeply revealing reports from reliable major media sources available here.