Evaluating Stock-Trading Practices and Their Regulation

42 J. CORP. LAW 887 (2017)

Columbia Law and Economics Working Paper

53 Pages Posted: 19 Jan 2018 Last revised: 6 May 2018

See all articles by Merritt B. Fox

Merritt B. Fox

Columbia University - Law School

Kevin S. Haeberle

William & Mary Law School

Date Written: 2017

Abstract

High-frequency trading, dark pools, and the practices associated with them have come under tremendous scrutiny lately, giving rise to much hot rhetoric. Missing from the discussion, however, is a principled, comprehensive standard for evaluating such practices and the law that governs them. This Article fills that gap by providing a general framework for making serious normative judgments about stock-trading behavior and its regulation. In particular, we argue that such practices and laws should be evaluated with an eye to the secondary trading market’s impact on four main aspects of our economy: the use of existing productive capacity, the allocation of capital, the allocation of resources over time, and the allocation of risk. Three additional considerations should also be taken into account: the amount of resources consumed by the operation of the market, the market’s ability to innovate, and fairness.

Suggested Citation

Fox, Merritt B. and Haeberle, Kevin S., Evaluating Stock-Trading Practices and Their Regulation (2017). 42 J. CORP. LAW 887 (2017); Columbia Law and Economics Working Paper. Available at SSRN: https://ssrn.com/abstract=3101140

Merritt B. Fox

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

Kevin S. Haeberle (Contact Author)

William & Mary Law School ( email )

613 South Henry St
Williamsburg, VA 23185
United States

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