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Time, trading and algorithms in financial sector security

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  • Grahame F. Thompson

Abstract

This article examines the financial security issues raised by the rapid development of high-frequency trading (HFT). HFT involves automated algorithmic trading of financial instruments where the objective is to reduce the time scale between the initiation and execution of trades to microseconds (or even nanoseconds) so as to reap competitive advantage. After outlining the contours of a HFT world, the presentation goes on to discuss some of its important consequences and implications. Several matters are discussed in this context: market manipulation, hacking, index construction and violence. Of particular significance for the notion of financial security is the issue of time as embodied in algorithmic trading. In turn this raises concerns over the regulation and management of this new field of financial innovation and trading activity.

Suggested Citation

  • Grahame F. Thompson, 2017. "Time, trading and algorithms in financial sector security," New Political Economy, Taylor & Francis Journals, vol. 22(1), pages 1-11, January.
    • Handle: RePEc:taf:cnpexx:v:22:y:2017:i:1:p:1-11
    DOI: 10.1080/13563467.2016.1183116
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    References listed on IDEAS

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    1. Christian Marazzi, 2010. "The Violence of Financial Capitalism," MIT Press Books, The MIT Press, edition 1, volume 1, number 1584350830, April.
    2. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
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    Cited by:

    1. Xusen Cheng & Danya Huang & Jin Chen & Xiangsong Meng & Chengyao Li, 2019. "An Investigation on Factors Affecting Stock Valuation Using Text Mining for Automated Trading," Sustainability, MDPI, vol. 11(7), pages 1-17, April.
    2. Grahame F. Thompson, 2020. "Deal or no deal? Some reflections on the ‘Baker-Thompson rule,’ ‘matching,’ and ‘market design’," Journal of Cultural Economy, Taylor & Francis Journals, vol. 13(5), pages 652-662, September.
    3. Nikolay Ivanov & Qiben Yan, 2021. "Constraint-Based Inference of Heuristics for Foreign Exchange Trade Model Optimization," Papers 2105.14194, arXiv.org.

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