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Regulations and unhealthy market strategies in High Frequency Trading
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
2014 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesisAlternative title
Regleringar och osunda marknadsstrategier inom högfrekvenshandeln (Swedish)
Abstract [en]

High frequency trading, a version of algorithmic trading, has in recent years increased, and now represents a significant part of the trading. It has occasionally upset the public, due to its connections to events that brought negative publicity in media. Because of the complicated structure that high frequency trading have, it makes it difficult for the common man to fully understand its nature.

My purpose of this work is to give a clearer picture of the various less desirable market strategies that is currently being used, and what the situation is regarding regulations. The focus is thus not on high frequency trading as a whole, nor, consequently, on the potential benefits it can bring. The approach has been to use qualitative information in the form of interviews combined with literature studies to generate a clearer picture of the current situation.

The conclusion is that the development of technology has led to a situation which is not optimal regarding high frequency trading. Market confidence has been affected and its competitive neutrality has been questioned. Regulations are unfortunately lagging, relative to the market situation. Despite this, my assessment, drawn from the interviews, is that it will get better.

Abstract [sv]

Högfrekvenshandel, som är en variant av algoritmhandel, har under de senaste åren ökat, och står numera för en betydande del av dagens handel. Med tiden har högfrekvenshandeln stundtals upprört allmänheten, i samband med händelser som givit negativt publicitet i media. På grund av högfrekvenshandelns komplicerade uppbyggnad har det dock varit svårt för mindre insatta att utläsa dess egentliga egenskaper.

Mitt syfte med arbetet är att förmedla en tydligare bild av de olika mindre önskvärda marknadsstrategier som idag används, och hur situationen ser ut med regleringar. Fokus läggs således ej på högfrekvenshandel i sin helhet, det vill säga inte de potentiella fördelar den kan medföra. Tillvägagångssättet har varit att med kvalitativ information i form av intervjuer tillsammans med litteraturstudier skapa en tydligare bild av nuvarande situation.

Slutsatsen som dras är att den tekniska utvecklingen som lett fram till dagens situation inte är optimal avseende högfrekvenshandeln. Marknadens förtroende har påverkats och dess konkurrensneutralitet ifrågasatts. Regleringarna är i förhållande till marknadssituation dessvärre eftersläpande. Trots detta är min bedömning utifrån gjorda intervjuer att det kommer att bli bättre.

Place, publisher, year, edition, pages
2014.
Keyword [en]
High Frequency Trading, Unsound market strategies, Speed, Regulations, MiFID
Keyword [sv]
Högfrekvenshandel, Osunda marknadsstrategier, Hastighet, Regleringar, MiFID
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:kth:diva-152598OAI: oai:DiVA.org:kth-152598DiVA: diva2:750513
Supervisors
Examiners
Available from: 2014-09-29 Created: 2014-09-29 Last updated: 2014-09-29Bibliographically approved

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