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High frequency trading: an overview

Author

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  • Alfonso Puorro

    (Bank of italy)

Abstract

This paper examines high-frequency trading systems, which were first developed in the US equity markets but have spread steadily to most asset classes on the main world financial markets. It analyzes the current regulatory and technological structures of the markets and describes the inefficiencies and informational advantages that high-frequency trading systems seek to exploit and the strategies they use. The paper concludes with an assessment of the positive and negative impacts of the presence of this new type of player on the overall quality of the financial markets.

Suggested Citation

  • Alfonso Puorro, 2013. "High frequency trading: an overview," Questioni di Economia e Finanza (Occasional Papers) 198, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_198_13
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2013-0198/QEF_198.pdf
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    References listed on IDEAS

    as
    1. Didier SORNETTE & Susanne VON DER BECKE, 2011. "Crashes and High Frequency Trading," Swiss Finance Institute Research Paper Series 11-63, Swiss Finance Institute.
    2. Reginald D. Smith, 2010. "Is high-frequency trading inducing changes in market microstructure and dynamics?," Papers 1006.5490, arXiv.org, revised Sep 2010.
    3. Didier SORNETTE & Susanne VON DER BECKE, 2011. "Crashes and High Frequency Trading," Swiss Finance Institute Research Paper Series 11-64, Swiss Finance Institute.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    high frequency trading;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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