The "Flash Boys" Effect: An analysis of high-frequency trading in the online media
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The
“Flash
Boys”
Effect:
An
analysis
of
high-‐frequency
trading
in
the
online
media
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 1
Table of Summary
Executive Contents
Introduc?on/Methodology
………………………………………………………………………………………
3
Execu?ve
Summary
……………………………………………………………………………….…………………...
4
Overall
Coverage
………………………………………………………………………………………………………….
5
Flash
Boys
……………………………………………………………………………………....................................
9
Dark
pools
…………………………………………………………………………………………….…………………...…
10
Inves?ga?ons
……………………………………………………………………………………………………………….
11
About
Us
………………………………………………………………………………………………………………………...
12
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 2
Executive Summary
Introduction/Methodology
What’s
this
report
about?
The
goal
of
this
report
is
twofold
–
to
show
the
impact
of
the
Michael
Lewis
book
Flash
Boys
on
media
men7ons
of
high-‐frequency
trading
(HFT),
and
to
illustrate
the
nature
of
that
coverage
through
analysis
of
top
organiza7ons,
top
issues/events,
and
the
top
outlets
and
journalists
found
within
that
coverage.
What
exactly
is
high-‐frequency
trading?
Good
ques7on.
Investopedia
says
high-‐frequency
trading
is
a
“trading
plaDorm
that
uses
powerful
computers
to
transact
a
large
number
of
orders
at
very
fast
speeds.
High-‐frequency
trading
uses
complex
algorithms
to
analyze
mul7ple
markets
and
execute
orders
based
on
market
condi7ons.
Typically,
the
traders
with
the
fastest
execu7on
speeds
will
be
more
profitable
than
traders
with
slower
execu7on
speeds.”
The
book’s
main
angle
–
that
high-‐frequency
trading
is
essen7ally
a
nega7ve
prac7ce
allowing
some
traders
an
unfair
advantage
in
the
market
–
was
a
constant
theme
in
media
coverage.
What
media
coverage
did
you
use?
The
report
was
limited
to
men7ons
of
high-‐frequency
trading
in
online
news
stories
from
major
English
daily
newspaper
sites
in
North
America,
major
financial
news
websites
and
newswires,
and
major
general
news
sites.
Coverage
was
monitored
and
collected
using
the
keyword
“high
frequency
trading.”
When
exactly
did
you
look
at
coverage?
Coverage
was
analyzed
during
the
first
half
of
2014:
January
1
to
June
30,
2014.
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 3
Executive Summary
• Following
the
ini7al
spike
created
by
the
book
launch,
men7ons
of
high-‐frequency
trading
in
the
media
per
week
were
sustained
into
May
and
June
as
markets
and
organiza7ons
reacted.
• The
“Flash
Boys
effect”
on
media
coverage
of
HFT
was
so
great
that
men7ons
of
the
prac7ce
jumped
440
per
cent
in
total
in
the
three
months
following
its
release.
• The
book
was
the
most-‐covered
issue
or
event
during
the
study
period,
and
was
discussed
more
than
350-‐per-‐cent
more
than
June’s
Senate
hearings
into
HFT.
• Goldman
Sachs
was
the
most-‐men7oned
investment
bank
in
coverage,
and
had
the
highest
SOV
of
any
investment
bank
in
every
month
but
January
and
June.
It
was
followed
by
Barclays,
which
received
most
of
its
coverage
in
June
when
a
lawsuit
against
it
related
to
its
HFT
opera7ons
was
brought
by
the
New
York
Adorney
General.
Mentions of HFT
•
HFT
firm
Virtu
made
headlines
in
early
April
aeer
delaying
its
long-‐awaited
Ini7al
Public
jumped 440 per cent
Offering
just
days
following
the
book’s
in total in the three
release,
leading
many
to
speculate
that
the
months following
book
influenced
the
firm’s
decision
to
delay.
the book’s release.
• Bloomberg
was
the
top
online
outlet
to
run
stories
men7oning
high-‐frequency
trading,
closely
followed
by
CNBC
and
BusinessWeek.
The
Wall
Street
Journal
was
next,
followed
by
Reuters.
• Bloomberg’s
Sam
Mamudi
was
the
top
journalist
to
men7on
high-‐frequency
trading
in
his
coverage.
His
stories
were
typically
published
on
Bloomberg.com
and
on
BusinessWeek’s
website,
along
with
the
Washington
Post.
• Dark
pools/markets,
which
are
unregulated
markets
controlled
by
individual
banks,
were
very
scarcely
men7oned
prior
to
April.
But
they
ended
up
with
the
second-‐
highest
share
of
voice
overall,
with
men7ons
especially
picking
up
in
June
in
conjunc7on
with
the
Barclays
lawsuit.
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 4
Overall Coverage
Executive Summary
Total Articles: 2,414 Total Circulation: 5,189,474,170
Online
ar?cles
men?oning
“high
frequency
trading”
Barclays hit with lawsuit
800
from NY Attorney
“Flash Boys” General for alleged
700
release “unfair
trading practices”
600
500
Senate hearings on
Ar?cles
high-frequency
400
trading
300
200
100
0
Jan
02
-‐
Jan
20
-‐
Feb
07
-‐
Feb
25
-‐
Mar
15
-‐
Apr
02
-‐
Apr
20
-‐
May
08
-‐
May
26
-‐
Jun
13
-‐
Jan
19
Feb
06
Feb
24
Mar
14
Apr
01
Apr
19
May
07
May
25
Jun
12
Jun
30
Share
of
voice
–
Major
discount
brokerages
• Following
the
ini7al
spike
created
by
the
book
launch,
men7ons
of
high-‐frequency
trading
in
the
2%
media
per
week
were
sustained
into
May
and
June
as
markets
and
organiza7ons
reacted.
3%
4%
• The
“Flash
Boys
effect”
on
media
coverage
of
HFT
34%
was
so
great
that
men7ons
of
HFT
jumped
440
per
15%
cent
in
the
three
months
following
its
release.
• Men7ons
of
HFT
took
off
again
in
late
June,
aeer
the
New
York
Adorney
General
slapped
a
lawsuit
on
UK-‐based
Barclays
for
what
he
said
was
unfair
prac7ces
surrounding
its
HFT
techniques
and
16%
company-‐run
dark
pool.
• The
share
of
voice
of
major
discount
brokerages
26%
was
led
by
Charles
Schwab,
followed
by
TD
Ameritrade
and
E*Trade.
Discount
brokerages
were
typically
men7oned
as
a
tool
used
by
“mom
and
pop
investors”
(“What
Michael
Lewis
gets
wrong
about
speed
trading”
in
Businessweek
(online),
April
Charles
Schwab
TD
Ameritrade
E*Trade
1).
Fidelity
Scodrade
Interac7ve
Brokers
• Charles
Schwab
was
men7oned
most
oeen
because
Lightspeed
of
statements
made
by
Charles
Schwab
himself,
the
chairman
of
the
firm,
who
called
HFT
a
“growing
cancer
that
needs
to
be
addressed.”
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 5
Overall Coverage
• The
launch
of
“Flash
Boys”
was
the
most-‐
Share
of
voice
–
Notable
issues/events
covered
issue
or
event
during
the
study
period,
and
was
discussed
more
than
350-‐
per-‐cent
more
than
June’s
Senate
hearings
into
HFT.
2%
3%
Flash
Boys
• Dark
pools/markets,
which
are
unregulated
3%
markets
controlled
by
individual
investment
3%
31%
Dark
pools/markets
banks,
had
the
second-‐highest
share
of
voice,
with
men7ons
especially
picking
up
in
6%
Schneiderman
inves7ga7on
June
in
conjunc7on
with
the
FBI
inves7ga7on
Barclays
lawsuit.
8%
Flash
crash
of
2010
• The
various
ongoing
inves7ga7ons
into
HFT
Barclays
lawsuit
by
the
NY
Adorney
General,
the
FBI,
and
9%
the
Department
of
Jus7ce
received
Holder/DOJ
inves7ga7on
prominent
coverage
during
and
following
Senate
hearing
the
book’s
release.
14%
21%
"Maker-‐taker"
trading
• The
“Flash
Crash”
of
2010
was
oeen
referenced
as
an
example
of
nega7ve
Rhode
Island
lawsuit
consequences
of
automated
trading.
• The
“maker-‐taker”
trading
model,
which
is
related
to
HFT,
was
also
referenced
nega7vely
-‐-‐
especially
aeer
NYSE
President
Thomas
Farley
said
it
should
be
banned
during
June’s
Senate
hearings.
“A
huge
number
of
the
(HFT)
ou\its
he
dealt
with…
no
one
had
ever
heard
of,
and
the
firms
obviously
intended
to
keep
it
this
way.”
-‐
Excerpt
from
Flash
Boys
Share
of
voice
–
HFT
firms
• While
HFT
firms
aren’t
oeen
men7oned
in
the
1%
media,
companies
men7oned
in
Flash
Boys
3%
such
as
Getco,
Citadel,
Hudson
River
Trading
4%
Virtu
and
Spread
Networks
were
singled
out
in
11%
Knight
Capital
online
coverage.
38%
Getco
• HFT
firm
Virtu,
which
had
the
largest
share
of
voice
by
a
considerable
margin,
made
Citadel
headlines
in
early
April
aeer
delaying
its
long-‐
13%
Tradebot
awaited
Ini7al
Public
Offering
just
days
following
the
book’s
release
(“Virtu
to
Hudson
River
Trading
indefinitely
postpone
IPO:
report”
in
Atlanta
Spread
Networks
Journal-‐Cons?tu?on
(online),
April
18),
leading
14%
many
to
speculate
that
the
book
influenced
DRW
the
firm’s
decision
to
delay.
16%
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 6
Overall Coverage
Share
of
voice
–
Investment
Banks
• Goldman
Sachs
was
the
most-‐
men7oned
investment
bank
in
2%
2%
coverage,
and
had
the
highest
SOV
of
Goldman
Sachs
any
investment
bank
in
every
month
but
5%
Barclays
January
and
June.
5%
22%
Credit
Suisse
• It
was
followed
by
Barclays,
which
5%
JPMorgan
received
most
of
its
coverage
in
June
when
a
lawsuit
against
it
related
to
its
Ci7group
HFT
opera7ons
was
brought
by
the
New
6%
York
Adorney
General.
Morgan
Stanley
UBS
• Most
investment
banks
referenced
in
7%
coverage
were
US-‐based,
but
were
also
Deutche
Bank
19%
from
Switzerland
(Credit
Suisse,
UBS),
RBC
England
(Barclays),
Germany
(Deutsche
7%
Bank),
France
(BNP
Paribas)
and
Bank
of
America
Canada
(RBC).
10%
10%
BNP
Paribas
• The
large
majority
of
men7ons
of
all
Merrill
Lynch
investment
banks
rela7ng
to
HFT
were
nega7ve,
simply
due
to
the
nature
of
coverage.
Share
of
voice
–
Investment
Banks
over
?me
(by
ar?cles)
0
4
0
2
0
3
12
5
6
2
2
19
3
9
33
8
17
5
8
10
11
6
12
30
2
1
26
14
14
33
0
15
26
14
11
18
5
14
41
19
5
18
5
19
6
34
56
75
7
10
56
18
8
8
7
11
29
15
6
26
192
16
63
53
10
123
9
40
Jan
Feb
Mar
Apr
May
Jun
Goldman
Sachs
Barclays
Credit
Suisse
JPMorgan
Ci7group
Morgan
Stanley
UBS
Deutche
Bank
RBC
Bank
of
America
BNP
Paribas
Merrill
Lynch
• The
propor7on
of
men7ons
of
Goldman
Sachs
was
highest
in
every
month
except
January
and
June,
when
news
broke
that
the
New
York
Adorney
General
was
launching
a
lawsuit
against
Barclays
for
what
his
office
said
are
“unfair
prac7ces
associated
with
its
high-‐frequency
trading
techniques.”
MediaMiser
©
2©
014
MediaMiser
2014 Ltd.
High-Frequency Trading 7
Overall Coverage
Top
journalists
• Bloomberg’s
Sam
Mamudi
was
the
top
journalist
to
men7on
high-‐
frequency
trading
in
his
coverage.
Bob
Pisani
-‐
CNBC
19
His
stories
were
typically
published
on
Bloomberg.com
and
on
Kevin
Dugan
-‐
New
York
Post
19
BusinessWeek’s
website,
along
with
Sarah
Lynch
-‐
Reuters
20
the
Washington
Post.
Carla
Main
-‐
Bloomberg
30
• Mr.
Mamudi
was
followed
by
John
McCrank
and
Karen
Freifeld,
both
of
Bradley
Hope
-‐
WSJ
33
Reuters.
Scod
Paderson
-‐
WSJ
36
• Mr.
McCrank’s
high
numbers
were
Mad
Levine
-‐
Bloomberg
39
due
to
several
syndicated
stories
that
appeared
in
publica7ons
such
Karen
Freifeld
-‐
Reuters
49
as
the
Chicago
Tribune
and
South
Florida
Sun-‐Sen?nel,
such
as
“IEX
John
McCrank
-‐
Reuters
63
eyes
stock
exchange
status
as
firms
Sam
Mamudi
-‐
Bloomberg
105
come
knocking”
(April
5)
and
“New
York
adorney
general
accuses
0
20
40
60
80
100
120
Barclays
of
‘dark
pool’
fraud”
Ar7cles
(June
26).
• Ms.
Freifeld’s
numbers
were
also
Top
outlets
high
thanks
to
her
stories
being
syndicated
(“New
York
AG
slaps
New
York
Times
52
Barclays
with
securi7es
fraud
suit”
in
the
Chicago
Tribune
(online),
Forbes
64
June
25).
CNN
77
• Bloomberg
was
the
top
online
outlet
Washington
Post
98
to
run
stories
men7oning
high-‐
frequency
trading,
closely
followed
NBC
News
104
by
CNBC
and
BusinessWeek.
The
Reuters
184
Wall
Street
Journal
was
next,
followed
by
Reuters.
Wall
Street
Journal
194
• All
of
the
top
online
outlets
were
BusinessWeek
265
na7onal
in
scope.
Honourable
men7ons
go
to
the
New
York
Post
CNBC
288
and
Huffington
Post,
which
didn’t
Bloomberg
297
make
the
top
ten
but
published
49
and
46
stories,
respec7vely.
0
50
100
150
200
250
300
350
Ar7cles
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 8
Flash Boys
Total Articles: 810 Total Circulation: 1,783,731,467
Online
ar?cles
men?oning
“Flash
Boys”
*
450
400
“Flash Boys”
350
released
March 31
300
Ar?cles
250
200
150
100
50
0
Jan
02
-‐
Jan
Jan
20
-‐
Feb
Feb
07
-‐
Feb
25
-‐
Mar
14
-‐
Mar
31
-‐
Apr
17
-‐
May
04
-‐
May
21
-‐
Jun
07
-‐
Jun
23
-‐
Jun
19
06
Feb
24
Mar
13
Mar
30
Apr
16
May
03
May
20
Jun
06
Jun
23
30
Top
outlets
men?oning
Flash
Boys
• The
release
of
Flash
Boys
caused
the
single
largest
spike
in
coverage
during
the
study
period,
and
con7nued
to
be
men7oned
in
NBC
News
20
follow-‐up
coverage
well
into
June.
It
also
caused
the
largest
spike
of
any
news
item
Washington
Post
22
related
to
HFT
during
the
study
period.
New
York
Post
26
• The
top
publica7ons
men7oning
Flash
Boys
were
the
same
as
the
top
five
who
covered
Huffington
Post
30
high-‐frequency
trading
in
general,
although
the
order
was
slightly
different,
with
CNN
40
BusinessWeek
coming
out
on
top.
Reuters
62
• Men7ons
of
Flash
Boys
jumped
slightly
during
June’s
Senate
hearings
on
HFT,
mostly
CNBC
82
in
rela7on
to
the
book
“sounding
the
alarm
about
a
poten7ally
rigged
stock
market
Wall
Street
Journal
89
system”
(‘Just
3
Senators
have
ques7ons
at
hearing
on
flash
trading”
in
Huffington
Post,
Bloomberg
90
June
17).
BusinessWeek
97
• The
book
Flash
Boys
was
discussed
around
350-‐per-‐cent
more
than
June’s
Senate
0
20
40
60
80
100
120
hearings
into
HFT,
which
subpoenaed
several
Ar7cles
well-‐known
financial
execu7ves
to
tes7fy.
*
In
ar7cles
that
also
men7on
“high-‐
frequency
trading”
©
2©
014
MediaMiser
MediaMiser 2014 Ltd.
High-Frequency Trading 9
Dark pools
Total Articles: 535 Total Circulation: 220,916,500
Online
ar?cles
men?oning
“dark
pools”
*
140
…and continued well after
the book’s release,
120
jumping again with the
Hardly mentioned in Barclay’s lawsuit by the NY
the media before the
100
Attorney General
end of March,
mentions of dark pools
80
peaked in
Ar?cles
early April…
60
40
20
0
Jan
02
-‐
Jan
Jan
20
-‐
Feb
07
-‐
Feb
25
-‐
Mar
14
-‐
Mar
31
-‐
Apr
17
-‐
May
04
-‐
May
21
-‐
Jun
07
-‐
Jun
23
-‐
Jun
19
Feb
06
Feb
24
Mar
13
Mar
30
Apr
16
May
03
May
20
Jun
06
Jun
23
30
SOV
–
Investment
Banks
(in
stories
• Dark
pools
or
markets,
which
are
unregulated
financial
marketplaces
run
by
individual
investment
men?oning
dark
pools)
banks,
were
brought
into
the
media
limelight
following
the
release
of
“Flash
Boys”.
• There
was
virtually
no
coverage
of
dark
markets
1%
1%
Barclays
before
the
release,
but
men7ons
shot
up
412
per
cent
5%
between
the
middle
and
end
of
March.
Goldman
Sachs
25%
5%
• About
a
week
aeer
the
book’s
release,
it
was
reported
Credit
Suisse
that
Goldman
Sachs
was
considering
shuwng
its
pool.
5%
5%
JPMorgan
• A
small
spike
in
January
was
driven
by
a
syndicated
Deutche
Bank
Reuters
story
on
EU
securi7es
reform,
which
Ci7group
men7oned
trading
volume
limita7ons
on
European
7%
dark
markets
(“EU
reaches
deal
on
sweeping
securi7es
Morgan
Stanley
reform”,
Jan.
14).
7%
20%
UBS
• A
secondary
spike
in
late
May/early
June
was
mostly
7%
RBC
driven
by
coverage
of
proposed
SEC
rules
for
dark
12%
pools,
led
by
chairperson
Mary
Jo
White.
A
final
spike
Bank
of
America
in
late
June
can
be
adributed
to
the
Barclays
lawsuit
Merrill
Lynch
which
specifically
called
out
the
firm’s
prac7ces
within
its
unregulated
dark
pool.
BNP
Paribas
• This
resulted
in
Barclay’s
being
the
most-‐men7oned
*
In
ar7cles
that
also
investment
bank
in
rela7on
to
dark
pools.
men7on
“high-‐
frequency
trading”
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High-Frequency Trading 10
Investigations
Initiatives
Total Articles: 502 Total Circulation: 920,865,335
Online
ar?cles
men?oning
inves?ga?ons/hearings
*
Lawsuit against Barclays by
140
New York Attorney General
Schneiderman; Hearing by
120
Senate Subcommittee on
Investigations
Ongoing Schneiderman,
100
Holder and FBI investigations
mentioned within articles
about the launch of Flash
80
Boys
60
40
20
0
Jan
02
-‐
Jan
Jan
20
-‐
Feb
Feb
07
-‐
Feb
25
-‐
Mar
15
-‐
Apr
02
-‐
Apr
Apr
20
-‐
May
08
-‐
May
26
-‐
Jun
13
-‐
Jun
19
06
Feb
24
Mar
14
Apr
01
19
May
07
May
25
Jun
12
30
Schneiderman
inves7ga7on
Senate
hearing
Holder/DOJ
inves7ga7on
FBI
inves7ga7on
SOV
–
Investment
Banks
(in
stories
• Ongoing
inves7ga7ons
were
barely
men7oned
men?oning
inves?ga?ons)
before
the
lead-‐up
to
the
Flash
Boys
release.
Unlike
the
FBI
and
DOJ
inves7ga7ons,
men7ons
of
the
NY
Adorney
General
(Schneiderman)
Goldman
Sachs
inves7ga7on
persisted
well
into
May
thanks
to
2%
news
in
early
May
about
the
New
York
Adorney
Barclays
General
planning
to
subpoena
to
various
3%
1%
Credit
Suisse
exchanges
(“New
York
Adorney
General
eyes
25%
exchanges
in
high
frequency
probe”
in
CNBC
4%
Ci7group
(online),
May
2)).
5%
JP
Morgan
• The
“maker-‐taker”
trading
model
was
referenced
8%
mostly
during
Senate
hearings
in
June,
as
some
Morgan
Stanley
tes7fying
financial
execu7ves
stated
the
model
UBS
should
be
outlawed
“Stock
exchange
pricing
model
8%
RBC
comes
under
fire
at
Senate
hearing”
in
South
15%
Florida
Sun-‐Sen?nel
(online),
June
17).
8%
Deutche
Bank
Bank
of
America
• Goldman
Sachs
was
once
again
the
most-‐
9%
12%
men7oned
investment
bank,
this
7me
in
stories
Merrill
Lynch
men7oning
ongoing
HFT
inves7ga7ons
and
hearings.
BNP
Paribas
*
In
ar7cles
that
also
• There
was
a
small
bump
in
men7ons
of
senate
men7on
“high-‐
hearings
around
May
13,
thanks
to
a
one-‐day
frequency
trading”
hearing
about
HFT.
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High-Frequency Trading 11
About Us
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is
a
leading
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of
media
monitoring
and
analysis
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and
professional
services
for
organiza7ons
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Through
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For
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daily
media
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through
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For
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visit
www.mediamiser.com
or
contact:
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Donnelly
Director
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jdonnelly@mediamiser.com
(613)
232-‐7797
x
117
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High-Frequency Trading 12
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