Nasdaq seeks upside from markets debate as profits rise
By John McCrank
(Reuters) - Author Michael Lewis' claim that the U.S. stock market is rigged was "irresponsible," but the debate it has sparked could lead to positive change, said Bob Greifeld, chief executive of Nasdaq OMX Group (NDAQ.O: Quote), which reported higher earnings on Thursday.
In "Flash Boys: A Wall Street Revolt," Lewis says that high-speed traders bilk billions from the financial system using ultra-fast telecommunications links, microwave towers and special access to exchanges to gain an edge over other traders.
"I think certainly it was an irresponsible piece of work and it served to tell a story without any research or factual checking of what was going on and I think it did a disservice to the industry," Greifeld said in an interview.
The debate over the fairness of the markets and the role of high-speed traders is not new, but Lewis took it mainstream. Shortly before "Flash Boys" was released in late March, New York Attorney General Eric Schneiderman said U.S. stock exchanges and alternative trading platforms provide high-frequency traders (HFTs) with unfair technological advantages that give them early access to key data.
Schneiderman said he had begun meeting with exchanges and alternative trading venues, known as dark pools, to discuss reforms. Last week, Reuters learned that his office had sent subpoenas to at least half-a-dozen HFT firms seeking information on their relationships with exchanges.
Nasdaq has not been subpoenaed, Greifeld said.
The U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Bureau of Investigation have said they had several active probes into HFT.
HFT AND MARKET MAKERS Continued...