College Kids Are Now High Frequency Trading From Dorm Rooms

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If you continue to browse our website, you agree with our use of cookies. For more details and how to manage cookies i. All search results are shown on our website boerse-frankfurt. High-frequency trading HFT is a much-discussed trading technology allowing securities transactions to be executed via independently acting, extremely fast and powerful computers. This technology was developed in the course of the advancing technological evolution of the financial markets and already constitutes a significant share of the trading volume on European exchanges today.

It thereby renders a key contribution to increasing liquidity in securities trading and reducing spreads. The improved price quality on the markets also how to high frequency trade companies by way of lower financing costs. High-frequency trading thus plays a major role in efficient and functioning capital markets and bears economic benefits. However, as with other technological innovations, certain risks such as increased volatility, market manipulations or technical errors cannot be excluded in connection with high-frequency trading.

This page contains a number of key elements of the High-Frequency Trading Act plus related links. At the request of the exchange supervisory authority or market supervision, the trading participant must at any time furnish information on how to high frequency trade trading strategies, parameters and concentration limits that underlie the designated algorithms. Corresponding information on the data to be provided can be found on the exchange supervisory body websites.

The law requires trading participants to guarantee an appropriate ratio of their order entries, modifications and deletions to the transactions actually executed. The law requires the stock exchange to charge fees for excessive use of the trading systems, especially a disproportionately how to high frequency trade number of order entries, modifications and deletions.

The Market Status Indicator displays the current technical availability of the trading system. It indicates whether Xetra newsboard messages regarding current technical issues of the trading system have been published or will be published shortly. We strongly recommend not to take any decisions based on the indications in the Market Status Indicator. Please always check the Xetra newsboard for comprehensive information.

Back to page Print. Navigator Who are you? I am looking for Specialist Designated Sponsor Back. Investor Capital Market Advisor Back. Price search Please select Further information What actually is High Frequency Trading video. Amendments to Exchange Rules for the Frankfurt Stock Exchange regarding flagging of algorithms and order-to-trade ratios. Flagging of Orders generated through algorithmic Trading. German High How to high frequency trade Trading Act has become effective.

German High Frequency Trading Bill passed. BaFin FAQs will be updated continuously. High-frequency trading study, Prof. High-frequency trading at deutsche-boerse. High-frequency trading at eurexchange. Trading System experiencing issues Trading System experiencing serious issues. Xetra newsboard Show information.

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Due to technological innovation and automation, trading on equity markets has changed dramatically during the past twenty years. Despite increasing liquidity, narrowing spreads, and reducing short-term volatility, HFT can negatively impact market quality and stability, and render marketplaces more vulnerable, especially during crisis periods or under uncertain market conditions. In both the U. The current financial markets settings offer many ways to gain early access to inside information and trade data.

Low-latency news wires and market data feeds, along with co-location, are available to any investor willing to pay for these services. But, as a matter of fact, selling these services gives rise to information asymmetries among investors to the advantage of those, such as high-frequency traders HFTs , who actually find themselves in the position of profiting from faster access to market-moving information, due to their superior capacity to process information and trade upon new information before it reaches other investors.

The resulting two-tiered system of information dissemination contrasts the principle of equal access to information underlying financial regulation in the U.

On the other hand, insider trading rules seem not to apply to early access to trade data, and subscribing to direct market data feeds from the exchanges does not violate Rule 10b-5, or Reg FD.

In the EU, too, where the principle of equal access to information is explicitly embraced by Regulation No. Information inequalities tolerated or admitted under the current insider trading and issuer disclosure rules affect financial market efficiency and challenge the theoretical framework underlying the ECMH.

Due to reduced latency, early access to trade data allows HFTs to anticipate order flow and trade ahead of slower investors. As a result, market prices may become less informative in the longer run, and negatively affect allocative efficiency. Importantly, HFT is structurally unable to contribute long-term price discovery, since trades are only marginally based upon information concerning securities and their issuers, and fundamental analysis thereof.

Given that the current insider trading regime is—if adequately enforced—suitable for restricting the sale of news wire services that provide early access to corporate information, reducing HFT-related informational inequalities requires focusing on data feeds that grant subscribers faster access to trade information. Minimizing information advance to prevent HFTs from exploiting aggressive trading strategies that ultimately micro-front-run slower investors, may be achieved by either restricting the sale of market data feeds, or slowing down HFT.

Unlike replacing the current continuous trading regime with a discrete-time trading regime based on frequent batched auctions, restricting the sale of trade data feeds or mandating speed bumps would not demand radical change in current equity markets regulation. But, either of these measures may discourage HFT, and weaken its positive effects in terms of increased liquidity and better short-term price discovery.

Importantly, they would not definitively curb HFT-related risks concerning long-term price accuracy. Supporting allocative efficiency within HFT-dominated equity markets by providing fundamental traders with more frequent and cheaper access to information might be pursued via two different, and to some extent opposite, strategies.

View the discussion thread. Skip to main content. You are here Blog Home. More from Giovanni Strampelli Gaia Balp. Law and Autonomous Systems Series: Smart Contracting Can Reduce Legal and Operating Costs Kai Jacob Like with any new and hyped topic, the current discussion on smart contracts is rather complex and confusing. I believe that asking What, Who and Why can help to structure the debate and shed some On the one hand, traditional banking players Matthias Breuer Back in the s, George Stigler called into question whether states should require firms to publicly report their financials.

A recent Stigler Center working paper revisits this issue and measures