New Research Discusses Impact and Future of HFT

The Financial Engineering Division at Stevens Institute of Technology published new research on the state of high-frequency trading (“HFT”) and a proposed solution to mitigate key problems, the authors believe may be created by HFT, while “maintaining its benefits.” 

The institute’s white paper, titled “On the Impact and Future of HFT,” addresses three major areas:

  • HFT, as seen from various market agents’ perspectives;
  • the imminent problems and risks of HFT, including potential HFT systemic risk, as seen by various stakeholders; and
  • possible solutions to existing issues of HFT, along with recent claims of unfair practices facing HFT. 

Additionally, the paper discusses issues raised by transmission distance and systemic latency, and proposes a new solution based on an “information transmission zoning concept” that would require “minimum financial information flow re-architecting and no major changes in regulation NMS.”

Commissioned by the Investor Responsibility Research Center Institute, the research for the paper was conducted by Khaldoun Khashanah, Ph.D., Ionut Florescu, Ph.D. and Steve Yang, Ph.D., all of whom are from the Stevens Institute of Technology’s Financial Engineering Division.

See: White Paper titled “On the Impact and Future of HFT.”