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Journals / Alanya Akademik Bakış / 2021 / Cilt: 5 - Sayı: 1

High-Frequency Trading and its Impact on Market Liquidity: A Review of Literature

Yüksek Frekanslı İşlemler ve Piyasa Likiditesine Etkileri: Yazın Taraması

Oğuz ERSAN
Nihan DALGIÇ
Cumhur EKİNCİ
Mehmet BODUR
Pages
345–368
Publication Date
2022-10-12
DOI
—
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

Latter regards the certain characteristics of HFTliquidity provision with the potential to present externalities for the market.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:High-frequency trading (HFT) has been dominating the activity in developedfinancial markets in the last two decades.
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Key Findings & Data:Despite its recent formation, theliterature on the impacts of HFT on financial markets and participants isbroad.
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Conclusion & Impact:Latter regards the certain characteristics of HFTliquidity provision with the potential to present externalities for the market.
🔬Design:Survey & Empirical Study
📍Scope:Comprehensive Sample
⚙️Variables:Domain Parameters

Abstract

High-frequency trading (HFT) has been dominating the activity in developedfinancial markets in the last two decades. Despite its recent formation, theliterature on the impacts of HFT on financial markets and participants isbroad. However, there are ongoing debates and unanswered questionswithin many subtopics. We survey through the research towards HFT effectson liquidity in an attempt to explain the coexistence of evidence regardingboth the positive and the negative impacts of HFT. We name two mainfactors leading to mixed results. Former concerns the negative marketconditions such as intraday shocks, through which HFT trading patternsmay sharply change. Latter regards the certain characteristics of HFTliquidity provision with the potential to present externalities for the market.

Özet

Yüksek frekanslı işlemler (YFİ) son yirmi yılda gelişmiş piyasalardaki işlemleri domine etmektedir. YFİ’nin finansal piyasalar ve katılımcıları üzerindeki etkilerine dair literatür yakın dönemde oluşmasına rağmen geniştir. Diğer yandan, birçok alt konuda devam eden akademik tartışmalar ve cevaplanmamış sorular mevcuttur. Bu çalışma YFİ’nin olumlu ve olumsuz etkilerine dair bulguların beraberce yer aldığı bir alt konu olan YFİ’nin likidite üzerindeki etkilerini inceleyen yazını taramaktadır. Çalışma kapsamında, literatürde çeşitlilik gösteren bu sonuçların varlığını açıklayan iki temel faktör olduğu ortaya konulmaktadır. Bunlardan ilki YFİ’nin piyasalardaki aktivitesinde keskin farklılıklar yaratabilen gün içi şoklar gibi olumsuz piyasa koşullarıdır. İkincisi ise YFİ yoluyla likidite sağlayıcılığı yapmanın piyasa için olumsuzluklar doğurma potansiyeline sahip olmasıdır.

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Cite This Article

ERSAN, O., DALGIÇ, N., EKİNCİ, C., BODUR, M. (2022). High-Frequency Trading and its Impact on Market Liquidity: A Review of Literature. Alanya Akademik Bakış, Cilt: 5 - Sayı: 1, 345–368. https://ajindex.com/articles/434758

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