High‐Frequency Traders and Market Structure
Year: 2014
Type: article
Abstract: The arrival of high‐frequency traders (HFTs) coincided with the entry of new markets and, subsequently, strong fragmentation of the order flow. These trends might be related as new markets serve HFTs who seek low fees and high speed. New markets only thrive on competitive price quotes that well‐connected HFTs can deliver as they can offload any nonzero position in any market they are connected to. HFTs may benefit or hurt market quality through adverse selection on price quotes, a technology arms race, or high‐risk trading strategies.
Source: Financial Review
DOI: 10.1111/fire.12038
Author: Albert J. Menkveld
Institutions: Tinbergen Institute, Vrije Universiteit Amsterdam
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3124024820