Securities Fraud Embedded in the Market Structure Crisis: High-Frequency Traders as Primary Violators

William & Mary Business Law Review, Vol. 9, No. 3, pp. 551-596, 2018

46 Pages Posted: 5 Jun 2017 Last revised: 13 May 2018

Date Written: May 1, 2018

Abstract

This Article analyzes approaches to attaching liability for securities fraud to high-frequency traders as primary violators in connection with the current market structure crisis. One of the manifestations of this crisis pertains to inadequate disclosure of advanced functionalities offered by trading venues, as exemplified by the order type controversy. The Article’s analysis is applied to secret arrangements between trading venues and preferred traders, glitches and gaming, and the reach of the doctrine of market manipulation, and several relevant issues are also viewed from the standpoint of the integrity of the trading process. The Article concludes by arguing for a balanced approach to catching certain problematic practices of high-frequency traders as securities fraud.

Keywords: High-Frequency Trading, Securities Fraud, Liability, Market Manipulation

JEL Classification: G18, K22

Suggested Citation

Dolgopolov, Stanislav, Securities Fraud Embedded in the Market Structure Crisis: High-Frequency Traders as Primary Violators (May 1, 2018). William & Mary Business Law Review, Vol. 9, No. 3, pp. 551-596, 2018, Available at SSRN: https://ssrn.com/abstract=2980136

Stanislav Dolgopolov (Contact Author)

Decimus Capital Markets, LLC ( email )

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