Another of Michael Lewis’ now-classic tales of Wall Street misadventure, this one focusing on the all-but-unseen - and even less understood - growth of high-frequency trading (HFT). This one follows the efforts of a small group of insiders to create a new stock exchange that’s immune both by policy and by design to the arbitrage and strategies HFT uses to game the conventional exchanges. A fascinating list of characters cross the pages, including Russian programmers, disaffected traders, and a network guy from Dublin - all working to make a system that was paying them well disappear in the interests of fairness (and their own long-term financial gain).

At one level this book is less satisfying than The Big Short: Inside the Doomsday Machine, perhaps because the story still hasn’t finished. The reader is left wanting to know the fate of the new IEX exchange, and the way the market changed as a result. For a techie, it’s also unsatisfying that so much of the technology remains unexplored, although it would obviously have made the book inaccessible to anyone but a computer junkie: perhaps there’s a much more technical follow-up that could be written.

Although the story mainly revolves a case of market failure - high-frequency traders capturing huge value while taking no risk and providing no real advantage - it’s also in a strange way an example of market success, when Goldman Sachs and other banks realise that their support of HFT is simply too risky for the gains they’re capturing themselves. There’s also an irony in the banks’ worrying that, in the case of another crash, the banks will take the losses while the HFT firms walk away with the gains - which is exactly the reverse of the situation after the 2008 crash, where the public took up the banks’ bad debts. Whether this is a sign of things to come is hard to decide, but it does show how even the most dysfunctional system can be changed when people recognise its dysfunction and are prepared to act to remediate it.

4/5. Finished Saturday 3 May, 2014.

(Originally published on Goodreads.)