The Mysterious Ethics of High-Frequency Trading
The ethics of high frequency trading are obscure, due in part to the complexity of the practice. This article contributes to the existing literature of ethics in financial markets by examining a recent trend in regulation in high frequency trading, the prohibition of deception. We argue that in the...
| Authors: | ; ; |
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| Format: | Electronic Article |
| Language: | English |
| Check availability: | HBZ Gateway |
| Interlibrary Loan: | Interlibrary Loan for the Fachinformationsdienste (Specialized Information Services in Germany) |
| Published: |
2016
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| In: |
Business ethics quarterly
Year: 2016, Volume: 26, Issue: 1, Pages: 1-22 |
| Further subjects: | B
Prudence
B High-frequency trading B ethics of financial services B Deception B efficient markets B finance ethics |
| Online Access: |
Volltext (JSTOR) Volltext (lizenzpflichtig) Volltext (lizenzpflichtig) |
| Summary: | The ethics of high frequency trading are obscure, due in part to the complexity of the practice. This article contributes to the existing literature of ethics in financial markets by examining a recent trend in regulation in high frequency trading, the prohibition of deception. We argue that in the financial markets almost any regulation, other than the most basic, tends to create a moral hazard and increase information asymmetry. Since the market’s job is, at least in part, price discovery, we argue that simplicity of regulation and restraint in regulation are virtues to a greater extent than in other areas of finance. This article proposes criteria for determining which high-frequency trading strategies should be regulated. |
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| ISSN: | 2153-3326 |
| Contains: | Enthalten in: Business ethics quarterly
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| Persistent identifiers: | DOI: 10.1017/beq.2015.41 |
