The Mysterious Ethics of High-Frequency Trading

Business Ethics Quarterly 26 (1):1-22 (2016)
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Abstract

ABSTRACT:The ethics of high frequency trading are obscure, due in part to the complexity of the practice. This article contributes to the existing literature of ethics in financial markets by examining a recent trend in regulation in high frequency trading, the prohibition of deception. We argue that in the financial markets almost any regulation, other than the most basic, tends to create a moral hazard and increase information asymmetry. Since the market’s job is, at least in part, price discovery, we argue that simplicity of regulation and restraint in regulation are virtues to a greater extent than in other areas of finance. This article proposes criteria for determining which high-frequency trading strategies should be regulated.

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Michael Davis
State University of New York at Buffalo

References found in this work

Self-Deception Unmasked.Alfred R. Mele - 2001 - Princeton University Press.
Seeing Through Self-Deception.Annette Barnes - 1997 - New York: Cambridge University Press.
3. Self-Deception and the Nature of Mind.Mark Johnston - 1988 - In Brian P. McLaughlin & Amélie Oksenberg Rorty (eds.), Perspectives on Self-Deception. University of California Press. pp. 63-91.

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