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Issue No.04 - July-Aug. (2012 vol.27)
pp: 70-73
Rahul Savani , University of Liverpool
ABSTRACT
The floor of the New York Stock Exchange, filled with traders in a frenzy of activity, is perhaps the iconic image of financial markets. But today, the TV pictures we see of the trading floor are largely symbolic. The frenzy of activity instead takes place in server rooms, with human market makers replaced by the algorithms of high-frequency trading firms. They make their money with razor-thin margins and huge volumes. To thrive, they must master both technology and strategy. The debate now rages as to how beneficial they are to markets and how they should be regulated.
INDEX TERMS
Computer crashes, Algorithms, Stock market, Finance, Investments, Economics, Game theory, algorithms, game theory, financial markets
CITATION
Rahul Savani, "High-Frequency Trading: The Faster, the Better?", IEEE Intelligent Systems, vol.27, no. 4, pp. 70-73, July-Aug. 2012, doi:10.1109/MIS.2012.75
REFERENCES
1. “Findings Regarding the Market Events of May 6, 2010,” Report of the Staffs of the CFTC and SEC to the Joint Advisory Committee on Emerging Regulatory Issues, 2010; www.sec.gov/news/studies/2010marketevents-report.pdf .
2. T. Hendershott and R. Riordan, “Algorithmic Trading and Information,” Working Paper No. 09-08, NET Inst., 2011; http://dx.doi.org/10.2139ssrn.1472050.
3. A. Chaboud et al., “Rise of the Machines: Algorithmic Trading in the Foreign Exchange Market,” Discussion Paper No. 980, FRB Int'l Finance, 13 June 2011; http://dx.doi.org/10.2139ssrn.1501135.
4. J. Hasbrouck and G. Saar, “Technology and Liquidity Provision: The Blurring of Traditional Definitions,” J. Financial Markets, vol. 12, no. 2, 2009, pp. 143–172.
5. “The Impact of High Frequency Trading on Asset Managers,” Lasair Capital, Feb. 2012; www.lasaircap.com/pdf/commentaryThe-Impact-of-High-Frequency-Trading-on-Asset-Managers-February-2012.pdf .
6. J. Doyne Farmer and D. Foley, “The Economy Needs Agent-Based Modeling,” Nature, vol. 460, 2009, pp. 685–686.
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