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High-Frequency Trading Book Riles Tempers on CNBC

The new book by Michael Lewis has inflamed passions across Wall Street, stoking a debate over the business of high-frequency trading.

On Tuesday, it also made for some explosive TV.

During an otherwise quiet day for the market, Mr. Lewis, along with the star of his book, Brad Katsuyama, appeared on CNBC to face off against William O’Brien, the president of the BATS Global Markets exchange, who was clearly enraged at the book’s argument that the stock market is rigged in favor of high-speed traders. Mr. Katsuyama, who runs an upstart trading platform called IEX, which tries to stop certain aspects of speedy trading, is portrayed in the book as the hero.

Insults flew. The guests raised their voices. Floor brokers at the New York Stock Exchange, glued to their television sets, whooped and hollered at the spoken jabs.

Mr. O’Brien had been waiting for this moment since he rapidly devoured the book, “Flash Boys,” on his way to work on Monday just hours after it was released.

“Michael and Brad, shame on both of you, for falsely accusing literally thousands of people and possibly scaring millions of investors in an effort to promote a business model,” he said as the segment began.

Mr. Katsuyama, pressed to defend the assertion that the market is rigged, unleashed this zinger: “I believe the markets are rigged. I also think you’re part of the rigging.”

That set the tone for the rest of the 20-minute slugfest.

“I think he’s part of the problem,” Mr. Lewis said, referring to Mr. O’Brien, who had just called the book a “300-page commercial” for Mr. Katsuyama’s new company.

Mr. Lewis rushed to his subject’s defense.

“What he’s trying to do is solve a problem that is at the heart of capitalism right now, the unfairness in the public exchanges,” Mr. Lewis said. “He’s taking great risk to do it. I mean, yeah, he’ll make some money if it works out. But the instant questioning of his motives is kind of incredible.”

Mr. O’Brien was not through. He questioned Mr. Lewis’s journalism, saying that the author had never called him for the book.

“I visited BATS,” Mr. Lewis said.

“No, you did not. That is false,” Mr. O’Brien shot back.

In an interview before the segment, Mr. Lewis told DealBook that he visited a BATS data center in Weehawken, N.J., in February 2013, accompanied by Mr. Katsuyama and Ronan Ryan, another executive at IEX.

But to Mr. O’Brien, that wasn’t good enough. BATS is based in Kansas, he pointed out.

Mr. Lewis said he tried to speak with David Cummings, the founder of BATS, who no longer works at the company. He added that Mr. O’Brien, who formerly ran Direct Edge, which recently merged with BATS, “wasn’t actually the head of BATS when the stuff I described occurred.”

“There’s actually no point in talking to someone who’s just throwing dust in the air,” Mr. Lewis said.

Mr. O’Brien accused the author of dishonesty.

“Just stop manipulating the audience, because talking to an ex-employee is not the same as saying you talked to us,” Mr. O’Brien said, referring to Mr. Cummings.

“You didn’t try to contact any employee at BATS, and your book is riddled with inaccuracies for that and many other reasons,” Mr. O’Brien continued.

“That’s not true, that’s not true,” Mr. Lewis repeated.

At one point, Mr. Katsuyama tried to find some common ground, conceding that “computerized trading has delivered benefits to the market.”

But he didn’t back down from his contention that Mr. O’Brien is “owned by intermediaries” and “owned by” high-frequency traders. To that, Mr. O’Brien laughed.

CNBC, aware that it had stumbled upon television gold, said on Twitter that the segment was “the fight that just stopped trading at the New York Stock Exchange.”