High Frequency Traders and Market Structure

Research output: Contribution to JournalArticleAcademicpeer-review


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. © 2014 The Eastern Finance Association.
Original languageEnglish
Pages (from-to)333-344
JournalFinancial Review
Issue number2
Publication statusPublished - 2014


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