High-frequency trading can harm market liquidity – ECB paper
Researcher finds increased competition can lead to rise in speculative strategies
There is empirical evidence that high-frequency traders (HFTs) can reduce liquidity on financial markets, a working paper published by the European Central Bank finds.
In Competition among high-frequency traders, and market quality, Johannes Breckenfelder investigates the hypothesis put forward by some recent theoretical models that competition among HFTs can harm market liquidity.
Breckenfelder uses a dataset that details trading by internationally well-established large HFT firms on the
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