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High-Frequency Trading and the Material Political Economy of Finance

In: Financial Markets in Perspective

Author

Listed:
  • Donald MacKenzie

    (University of Edinburgh)

Abstract

Over the last three decades, most face-to-face financial markets have shifted to electronic trading. Since around 2000, many markets have made the further transition to automated trading, including ultrafast, algorithmic high-frequency trading, or HFT. This chapter applies a perspective that the author calls “material political economy” to HFT, focusing on (a) the “signals” (patterns of data) that inform how HFT algorithms trade, (b) algorithms that usually “make” or “provide liquidity” (i.e., add orders to exchanges’ electronic order books that other algorithms or human beings can execute against), (c) algorithms that “take liquidity” (execute against orders already in order books), and (d) how HFT algorithms interact and exchanges’ material interventions in that interaction. The chapter examines how material features of HFT, its “signals,” and the technical systems that make HFT possible interweave in complex ways with power, politics, and finance’s mundane moneymaking.

Suggested Citation

  • Donald MacKenzie, 2022. "High-Frequency Trading and the Material Political Economy of Finance," Springer Studies in the History of Economic Thought, in: Arie Arnon & Maria Cristina Marcuzzo & Annalisa Rosselli (ed.), Financial Markets in Perspective, pages 83-100, Springer.
    • Handle: RePEc:spr:spshcp:978-3-030-86753-9_5
    DOI: 10.1007/978-3-030-86753-9_5
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