Law's Acceleration of Finance: Redefining the Problem of High-Frequency Trading

44 Pages Posted: 2 Sep 2015

See all articles by Frank A. Pasquale

Frank A. Pasquale

University of Maryland Francis King Carey School of Law; Yale University - Yale Information Society Project

Date Written: 2015

Abstract

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.

Keywords: HFT, LTF, legal theory of finance, dark pools, finance policy

Suggested Citation

Pasquale, Frank A., Law's Acceleration of Finance: Redefining the Problem of High-Frequency Trading (2015). 36 Cardozo Law Review 2085 (2015); U of Maryland Legal Studies Research Paper No. 2015-29. Available at SSRN: https://ssrn.com/abstract=2654269

Frank A. Pasquale (Contact Author)

University of Maryland Francis King Carey School of Law ( email )

500 West Baltimore Street
Baltimore, MD 21201-1786
United States
410-706-4820 (Phone)
410-706-0407 (Fax)

Yale University - Yale Information Society Project ( email )

127 Wall Street
New Haven, CT 06511
United States

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