High Frequency Traders and Market Structure

A.J. Menkveld

doi:10.1111/fire.12038

High Frequency Traders and Market Structure

A.J. Menkveld

Finance

Research output: Contribution to Journal › Article › Academic › peer-review

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. © 2014 The Eastern Finance Association.

Original language	English
Pages (from-to)	333-344
Journal	Financial Review
Volume	49
Issue number	2
DOIs	https://doi.org/10.1111/fire.12038
Publication status	Published - 2014

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1111/fire.12038

Persistent URL (handle)

Persistent link

Cite this

@article{d46b959736cb41bd866842b63bd0f3b0,

title = "High Frequency Traders and Market Structure",

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. {\textcopyright} 2014 The Eastern Finance Association.",

author = "A.J. Menkveld",

year = "2014",

doi = "10.1111/fire.12038",

language = "English",

volume = "49",

pages = "333--344",

journal = "Financial Review",

issn = "0066-5363",

number = "2",

}

TY - JOUR

T1 - High Frequency Traders and Market Structure

AU - Menkveld, A.J.

PY - 2014

Y1 - 2014

N2 - 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.

AB - 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.

U2 - 10.1111/fire.12038

DO - 10.1111/fire.12038

M3 - Article

SN - 0066-5363

VL - 49

SP - 333

EP - 344

JO - Financial Review

JF - Financial Review

IS - 2

ER -

High Frequency Traders and Market Structure

Abstract

UN SDGs

Access to Document

Persistent URL (handle)

Fingerprint

Cite this