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Full-Text Articles in Law
Business Law Bulletin, Fall 2015
Law's Acceleration Of Finance: Redefining The Problem Of High-Frequency Trading, Frank A. Pasquale
Law's Acceleration Of Finance: Redefining The Problem Of High-Frequency Trading, Frank A. Pasquale
Faculty Scholarship
High-frequency traders automate stock trading, placing thousands of orders over fractions of a second. Their algorithmic strategies are all too often mere rule manipulation or methods of using brute speed to gain advantages over rivals. Normative evaluation of finance’s algorithms must take into account the sector’s social function: to spur efficient, fair, and sustainable investment practices. The complex modeling deployed in high-frequency trading does not reliably contribute to these goals. Therefore, rather than straining to accommodate high-frequency trading strategies, regulators should eliminate many of them.