Is Wall Street 'Rigged' For High Speed Traders?

New York State Attorney General Eric Scheiderman says his office — along with the SEC and the Commodities and Futures Trading Commission -- is looking closely at the phenomenon of high speed trading. His announcement follows an interview with author Michael Lewis on "60 Minutes."

Lewis says that Wall Street, "the most iconic market in global capitalism, is rigged," to advantage high frequency traders.

Lewis explained when an average investor hits a button to buy a stock, high frequency traders can read that signal milliseconds before the trade is executed, buy the stock ahead of the average investor, and then sell it back to the average investor for a higher price.

Lewis says this is part of the wiring of the stock market, where high frequency traders have invested a lot of money to have those split second advantages.

High speed trading has defenders, who argue that the practice is actually lowering costs for all traders, by using technology to by-pass traditional middleman-traders who charged a much higher amount to make the market work, Manoj Narang, the chief executive of the New Jersey-based high-frequency trading company, Tradeworx, told the New York Times.

Narang also argued that preventing trading firms from placing their servers within exchange data centers would “set off a far more expensive arms race for physical proximity,” as firms buy real estate around the data centers and set up shop there.

The Financial Times' Cardiff Garcia joins Here & Now's Robin Young to explain the practice and the possible regulatory actions.