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Contribution Details

Type Master's Thesis
Scope Discipline-based scholarship
Title High-Frequency Trading - Its Role and Regulation in Today's Financial Markets
Organization Unit
Authors
  • Ludovic Favre-Bulle
Supervisors
  • Richard T. Meier
Language
  • English
Institution University of Zurich
Faculty Faculty of Business, Economics and Informatics
Number of Pages 73
Date 2017
Zusammenfassung High-Frequency Trading (HFT) plays an important role in today’s financial markets. It accounts for a large share of daily trading volume and has transformed the way most financial products are traded. This development is perceived both positively and negatively, leading to many debates and discussions among market participants, regulators and politicians. This thesis has addressed two widely debated aspects of HFT, namely its role and impact on the financial markets, and the possibility of improvements through regulation or other means. To do so, a qualitative approach has been used. The opinions and arguments of many different market actors have been collected from books, articles, academic reports and industry communications, as well as field interviews with three market participants, whose daily activities either consist of HFT or are affected by it. The objective of this process was to analyse from a neutral point of view the arguments of the supporters and the opponents of HFT, and more generally the opinions of those who are influenced by the phenomenon. Because the subject is sensitive, an essential aspect of the thesis was to adopt an impartial approach while collecting strong partial opinions. Another challenge was to collect opinions among HFT traders. Indeed, professionals in the field tend to remain discrete. The rather negative press about the industry plays a role in this discretion. This thesis analyses various angles of HFT. It provides explanations for its rapid development as well as its current place in the financial markets. It describes HFT activities in the markets and related concepts. Finally, it evaluates the impact of HFT on the financial markets and explores possibilities for improvement. As the complex nature of HFT suggests, the findings consist neither of clear-cut affirmations on the impacts of HFT, nor straightforward solutions for improvements in the financial markets. The findings of this thesis rather provide leads, suggestions and sometimes personal stances which point to certain actions that should be undertaken by regulators, market operators and market participants. It also aims to provide recommendations for future academic research.
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