I’m reading the new Michael Lewis book, Flash Boys: A Wall Street Revolt.
It seems that Russian Jews are behind much of the innovative high frequency trading. This shocked me. I thought such work would be the province of Africans and Mexicans.
Michael Lewis writes on page 95:
A surprisingly large number of the people pulled in by the big Wall Street banks to build the technology for high-frequency trading were Russians. “If you went to LinkedIn and looked at one of these Russian guys, you would see he was linked to all the other Russians,” said Schwall. “I’d go to find Dmitri and I’d also find Misha and Vladimir and Tolstoy or whatever.” The Russians came not from finance but from telecom, physics, medical research, university math departments, and a lot of other useful fields. The big Wall Street firms had become machines for turning analytically minded Russians into high-frequency traders…
From page 97:
Sergey Aleynikov wasn’t the world’s most eager immigrant to America, or, for that matter, to Wall Street. He’d left Russia in 1990, the year after the fall of the Berlin Wall, but more in sadness than in hope. “When I was nineteen I haven’t imagined leaving it,” he says. “I was very patriotic about Russia. I cried when Brezhnev died. And I always hated English. I thought I was completely incapable of learning languages.” His problem with Russia was that its government wouldn’t allow him to study what he wanted to study. He wasn’t religious in any conventional sense, but he’d been born a Jew, which had been noted on his Russian passport to remind everyone of the fact. As a Jew he expected to be given especially difficult entrance exams to university, which, if he passed them, would grant him access to just one of two Moscow universities that were more accepting of Jews, where he would study whatever the authorities permitted Jews to study. Math, in Serge’s case.
From page 125:
Constantine was also Russian, born and raised in a small town on the Volga River. He had a theory about why so many Russians had wound up inside high-frequency trading. The old Soviet educational system channeled people away from the humanities and into math and science. The old Soviet culture also left its former citizens oddly prepared for Wall Street in the early twenty-first century. The Soviet-controlled economy was horrible and complicated but riddled with loopholes. Everything was scarce; everything was also gettable, if you knew how to get it. “We had this system for seventy years,” said Constantine. “People learn to work around the system. The more you cultivate a class of people who know how to work around the system, the more people you will have who know how to do it well. All of the Soviet Union for seventy years were people who are skilled at working around the system.” The population was thus well suited to exploit megatrends in both computers and the United States financial markets. After the fall of the Berlin Wall, a lot of Russians fled to the United States without a lot of English; one way to make a living without having to converse with the locals was to program their computers. “I know people who never programmed computers but when they get here they say they are computer programmers,” said Constantine. A Russian also tended to be quicker than most to see holes built into the U.S. stock exchanges, even if those holes were unintentional, because he had been raised by parents, in turn raised by their own parents, to game a flawed system.
