What an awesome way to end a book: literally in the last paragraph, and this gives away no spoilers, Michael Lewis's excellent Flash Boys drops a weird infrastructural mystery, right when you were ready to turn out the light and go to sleep. But, right there, in the final six sentences, Lewis lights a fire.
You'll have to read the rest of the book—believe me, it's worth it, joining Russell Gold's The Boom as an early must-read book for 2014—if you want to know more about high-frequency trading itself and its irrational, insatiable demand for more speed. But, whether you've read the book or not, what follows should still make sense.
In the last few pages of his book, Lewis takes us out into the Appalachian wilds of Pennsylvania, on the side of a buzzing highway, where he is investigating a series of microwave transmission towers that have been built by someone—he's not yet sure who—in order to shave mere microseconds off the time a high-frequency trade would take to travel between an exchange in Carteret, New Jersey, and a firm based in Chicago. This is the kind of thing Kevin Slavin talked about in his exceptional TED Talk, for example, which, if you haven't seen it, is worth a view.
So Lewis is there, prowling around the base of one of these towers, trying to learn who built it—and, thus, exactly why.
And he notices something.
"I noticed, before we left," Lewis writes, "a metal plate attached to the fence around the tower. On it was a Federal Communications Commission license number: 1215095. The number, along an internet connection, was enough to lead an inquisitive person to the story behind the tower." Note that this is on the final page of the book.
"The application to use the tower to send a microwave signal," he continues, "had been filed in July 2012, and it had been filed by… well, it isn't possible to keep any of this secret anymore. A day's journey in cyberspace would lead anyone who wished to know it into another incredible but true Wall Street story of hypocrisy and secrecy and the endless quest by human beings to gain a certain edge in an uncertain world. All that one needed to discover the truth about the tower was the desire to know it."
What?! We're on page 271 of an economic thriller about billion-dollar trades, secret fibre optic cables, proprietary trading algorithms, impenetrable mathematics, and strategic if not ethically dubious Wall Street lawsuits, and you were about to put the book down, already with more than enough to think about—only to be hit with a terrible case of Googlephilia. What is Lewis talking about?
The tower in question, seen on Google Maps
That is, what is FCC license 1215095 and who filed it? What is this other "incredible but true Wall Street story" that Lewis simply leaves hanging there, after so thoroughly dazzling readers in the nearly 300 pages that came before?
If you want to know, you're not alone.
If you Google 'FCC license 1215095' you will find a whole lot of other people who have also read Flash Boys. It's an absolutely genius way to end a book, to be honest. You'll find that Zero Hedge has weighed in; you'll find private investigator Ann Brocklehurst has written a post that begins, cheekily enough, "You're here because you Googled FCC license 1215095, right?" Even the Wall Street Journal was on this last week, referring to the book's "cliffhanger" ending. And there are comments aplenty.
As Zero Hedge points out, the tower is owned by a businessman named Manoj Narang, while the actual application itself was filed by a woman who works at Narang's Thesys Technologies. What's Thesys? Zero Hedge tries to explain: "Thesys is an affiliate of Tradeworks, the Red Bank, New Jersey HFT operation that was hired in 2012 to license the MIDAS system to the the SEC. MIDAS, if you recall, is the data solution involving fast feeds that gives the SEC its ability to monitor quotes and trades at the same speeds the HFT firms do. Tradeworx not only provides the SEC with the fast feeds to view the limit order book as HFTs do, it also provides the analytic tools, and the framework and context to draw conclusions. MIDAS also powers the SEC's market structure website, which consistently puts out analysis that demonstrates that HFT is not the villain it is portrayed to be."
That's a lot of words to say that the tower is owned and run by some of the very people tasked with helping to regulate the high-frequency trades that they are now also participating in and profiting from by way of this tower. This is no doubt the "hypocrisy and secrecy and the endless quest by human beings to gain a certain edge in an uncertain world" that Lewis so acidly writes about on the book's final page.
But is the mystery actually solved here? And was there really a mystery at all?
It will hardly be surprising to learn that Narang has denied any wrongdoing, openly and without hesitation admitting that the tower is used to transmit financial information at high speed, but also accusing Lewis in the process of being in a cabal of other "conspiracy theorists" trying to make hay—or get future book deals, perhaps—out of idle speculation.
Here, it's funny to note that Thesys Technologies sounds almost like Theseus—lost in a labyrinth, indeed, unsure of which string to pull.
Whatever the final conclusion might be—and it seems Lewis's book, at the very least, has greatly accelerated the public debate about the legality of high-frequency trading, a debate compellingly outlined in the book itself—there is something perennially interesting about pieces of infrastructure in everyday life, what they do, who owns them, and how they got there.
Think of the weird, David Lynchian "transformer houses" of Toronto, the "telco towers" sprouting in cities like Los Angeles, disguised oil infrastructure, or even the fake Brooklyn townhouse hiding emergency exits and ventilation equipment for the New York subway. Strange networks, both public and privately owned, are all around us, it seems, only occasionally becoming visible through something like the final paragraph of Lewis's book.
But what is it about infrastructure that allows it to carry such mystery and heft—and what other examples of infrastructure, financial or not, urban or otherwise, have struck you as particularly thought-provoking? What other mysteries need to be solved?
Lead image: Lijuan Guo/Shutterstock