Flash Boys: A Wall Street Revolt Read Online Free

Some of them, as Brennan Carley put it, “would sell their grandmothers for a microsecond.” (A microsecond is one millionth of a second.) Exactly why speed was so important to them was not clear; what was clear was that they felt threatened by this faster new line. “Somebody would say, ‘Wait a second,’ ” recalls Carley. “ ‘If we want to continue with the strategies we are currently running, we have to be on this line. We have no choice but to pay whatever you’re asking. And you’re going to go from my office to talk to all of my competitors.’ ”
    “I’ll tell you my reaction to them,” says Darren Mulholland, a principal at a high-speed trading firm called Hudson River Trading. “It was, ‘Get out of my office.’ The thing I couldn’t believe was that when they came to my office they were going to go live in a month. And they didn’t even know who the clients were! They only discovered us from reading a letter we’d written to the SEC. . . .Who takes those kinds of business risks?”
    For $300,000 a month plus a few million more in up-front expenses, the people on Wall Street then making perhaps more money than people have ever made on Wall Street would enjoy the right to continue doing what they were already doing. “At that point they’d get kind of pissed off,” says Carley. After one sales meeting, David Barksdale turned to Spivey and said, Those people hate us. Oddly enough, Spivey loved these hostile encounters. “It was good to have twelve guys on the other side of the table, and they are all mad at you,” he said. “A dozen people told us only four guys would buy it, and they all bought it.” (Hudson River Trading bought the line.) Brennan Carley said, “We used to say, ‘We can’t take Dan to this meeting, because even if they have no choice, people do not want to do business with people they’re angry with.’ ”
    When the salesmen from Spread Networks moved from the smaller, lesser-known Wall Street firms to the big banks, the view inside the post-crisis financial world became even more intriguing. Citigroup, weirdly, insisted that Spread reroute the line from the building next to the Nasdaq in Carteret to their offices in lower Manhattan, the twists and turns of which added several milliseconds and defeated the line’s entire purpose. The other banks all grasped the point of the line but were given pause by the contract Spread required them to sign. This contract prohibited anyone who leased the line from allowing others to use it. Any big bank that leased a place on the line could use it for its own proprietary trading but was forbidden from sharing it with its brokerage customers. To Spread this seemed an obvious restriction: The line was more valuable the fewer people that had access to it. The whole point of the line was to create inside the public markets a private space, accessible only to those willing to pay the tens of millions of dollars in entry fees. “Credit Suisse was outraged,” says a Spread employee who negotiated with the big Wall Street banks. “They said, ‘You’re enabling people to screw their customers.’ ” The employee tried to argue that this was not true—that it was more complicated than that—but in the end Credit Suisse refused to sign the contract. Morgan Stanley, on the other hand, came back to Spread and said, We need you to change the language. “We say, ‘But you’re okay with the restrictions?’ And they say, ‘Absolutely, this is totally about optics.’ We had to wordsmith it so they had plausible deniability.” Morgan Stanley wanted to be able to trade for itself in a way it could not trade for its customers; it just didn’t want to seem as if it wanted to. Of all the big Wall Street banks, Goldman Sachs was the easiest to deal with. “Goldman had no problem signing it,” the Spread employee said.
    It was at just this moment—as the biggest Wall Street banks were leaping onto the line—that the line stopped in