Prakriti. M, NMIMS, Mumbai
ABSTRACT
The regulators of the securities market have always been looking for ways to promote transparency and fair competition in the securities market. High Frequency Trading is the highly sophisticated method of trading which indulges in the use of fast/powerful computer technology in order to execute large number of transactions in a matter of seconds. It is the use of complex algorithms which allows the traders to analyse multiple markets and execute trades based on the market conditions. High Frequency Trading is the way forward in the securities markets allowing the transactions to take place in the snap of a finger saving time and resources, the question that arises is with the dependance on technology comes higher risks, do the advantages of using High Frequency Trading overweight the risks?
While the whole world is moving towards adopting High Frequency Trading, India is still lagging a little behind on that front. Now with the introduction of the amendment in the companies’ act allowing the Indian companies to list abroad, there is a need for India to bring in more stringent regulations to govern high frequency trading.
This paper provides a brief overview of High Frequency Trading which includes its advantages, disadvantages, status in India and so on.
Keyword: High Frequency Trading, Securities market, Algorithmic Trading, Flash Crash, Risks.
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