High Frequency Trading: an overview

Date

2019

Authors

Barrutiabengoa Ortubai, Joxe Maria

Publisher

Acceso abierto / Sarbide irekia
Trabajo Fin de Grado / Gradu Amaierako Lana

Project identifier

Abstract

High Frequency Trading has been a recurring theme in financial debates. Fuelled by a considerable increase in worldwide trading volume and the sudden appearance of flash crashes, these trading strategies have drawn tremendous public attention in recent years. However, in order to form a well-founded opinion on the topic, and to be able to understand the consequences that ultra-fast trading provokes in financial markets, a deep research on the topic is necessary. Is not unusual to find inaccurate or bias opinions on the subject in the media or among several market participants, that lack any theoretical or empirical basis. In other words, the academic research on High Frequency Trading, and its consequences in financial markets, is limited and usually ignored. In consequence, the aim of this paper is to provide an up to date overview on High Frequency Trading, including definitions, key concepts, historical background, strategies, and its positive and negative consequences. Furthermore, by analysing certain proposed solutions to regulate or monitor ultra-fast trading activity, the paper contributes to the ongoing discussion on the subject, evaluating which could be the pros and the cons of each alternative, and which is their effectiveness in mitigating the problems that High Frequency Trading induces in financial markets. Hopefully, after reading this paper, the reader will have a more accurate insight on the topic.

Description

Keywords

High-Frequency Trading, Algorithmic trading, Latency, Trading strategies, Frequent batch auctions

Department

Faculty/School

Facultad de Ciencias Económicas y Empresariales / Ekonomia eta Enpresa Zientzien Fakultatea

Degree

Graduado o Graduada Internacional en Administración y Dirección de Empresas / Graduado o Graduada Internacional en Economía por la Universidad Pública de Navarra, Enpresen Administrazio eta Zuzendaritzan Nazioarteko Graduatua / Ekonomian Nazioarteko Graduatua Nafarroako Unibertsitate Publikoan

Doctorate program

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