The May 6, 2010, “flash crash” and other past trading glitches have led policy makers to question the effects of high-frequency trading on markets. Coding issues and faulty algorithms have clearly ignited some notable incidents. However, trading mistakes caused problems in markets long before servers began executing trades in microseconds. Finance experts Jonathan Brogaard, Terrence Hendershott and Ryan Riordan offer a useful look into the day-to-day reality of high-frequency trading. Although their report will prove hard work for anyone but specialists, getAbstract recommends it for its valuable analysis of the effects of such trading.
In this summary, you will learn
- How high-frequency traders (HFTs) aid price discovery,
- Why they add liquidity at times of market stress and
- How HFTs help make markets more efficient.
About the Authors
Jonathan Brogaard is an assistant professor of finance at the University of Washington. Terrence Hendershott is an associate professor at the University of California at Berkeley. Ryan Riordan is an assistant professor at the University of Ontario Institute of Technology.
Comment on this summary
Customers who read this summary also read
Federal Reserve Bank of Atlanta, 2016
Tobias Adrian et al.
Federal Reserve Bank of New York, 2016
Jack Bao et al.
Federal Reserve Board, 2016
World Bank Group
World Bank, 2016