Liam Vaughan’s clear explanations of these procedures are one of the things that make the book so compelling. Another is the way he brings out the moral subtleties. It isn’t a simple story of good versus evil — otherwise why would Sarao, the so-called ‘villain’, call on the regulators to act? You can’t say the baddies are on the same side. The HFT firms hate the spoofers, because HFT depends on people telling the truth about what they want to do. If a computer jumps to the front of the queue and buys in front of someone who was never going to buy in the first place, it’ll end up on the losing side.
It’s an extremely well-researched and clearly written book. It is also a reminder of the sheer oddity of the world of cutting-edge finance, in which very rich, clever people spend their professional lives selling each other bits of data. Navinder Sarao wanted to break into that set, and in doing so he disrupted some of the biggest, wealthiest and best politically connected financiers in the world, some of whom he regarded as cheats. Whether he and his spoofing machine caused the Flash Crash will always be unknown, but one thing’s for certain: he out-cheated the cheats. By the end of this story you can’t help but admire him for it.
Vaughan achieves something even more remarkable. He makes you sympathise with a trader who on a good day clears £700,000 — almost 30 times more than the average Briton makes in a year. That’s because it turns out that Nav is not your typical vulgar, show-me-the-money trader. Quite the opposite. He has no interest in getting filthy rich to lavish gifts on himself or others. “Material stuff is pointless,” he says.
Vaughan, a journalist for Bloomberg, describes how behind Sarao’s shambolic exterior is a man who possesses near-incomprehensible mathematical abilities, an aggressively foul mouth, particularly in online forums, a fondness for conspiracy theories, and a fortune worth tens of millions of dollars amassed through his trading. His parents had no clue, but unscrupulous entrepreneurs were only too happy to relieve him of his fortune. He can crunch numbers and spot patterns that are beyond the rest of us. But he cannot see the peril in telling regulators to “kiss my ass” or threatening to “cut their fucking thumbs off”. Flash Crash captures Sarao’s almost otherworldly oddness without crossing the line into poking fun at him.