About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

11 N.C. J.L. & Tech. 377 (2009-2010)
Technology's Latest Market Manipulator - High Frequency Trading: The Strategies, Tools, Risks, and Responses

handle is hein.journals/ncjl11 and id is 383 raw text is: NORTH CAROINAJOURNAL OF LAW & TECHNOLOGY Vote1E 11, IssuE 2: SPRING 2010 TECHNOLOGY'S LATEST MARKET MANIPULATOR? HIGH FREQUENCY TRADING: THE STRATEGIES, TOOLS, RISKS, AND RESPONSES Tara Bhupathi The development of high frequency trading technology has created significant controversy in the financial markets, especial/y in light of the increased use of tools such as naked access, flash orders, and co- location. This recent development argues that the SEC is correct in both banning naked access, because it increases risk of market detriment, as well as eliminating flash orders, due to their potential to aid in market manipulation. Further, the SEC's lack of regulatory response to high frequency trading and co-location should be maintained. Since neither mechanism presents a risk of market detriment or manipulation on its own, and both seem to be criticized solelv because they break from traditional market fndamentals, it would unnecessarilv sti/le technological development to insist on banning or minimizing the use qf these strategies. I. INTRODUCTION It's the summer of 1945, and Luise, a college student, interns for the New York Stock Exchange. Her job is to answer the telephone and handwrite the caller's trade requests. This information is then passed, via messenger, to a trader who eventually completes the transaction. Sixty-five years later, Bill, a software engineer with a Ph.D. in computer science, works for a small hedge fund that specializes in United States equity trading. His job entails figuring out how to decrease the amount of time it takes his trades to confirm-in microseconds. Luise and Bill's contrasting experiences offer a historied perspective of technology's impact on financial markets. Rapid technological advances have affected every aspect of society, causing the legal world to either choose to judicially adapt old laws and policies to the new digital situations or to legislatively create J.D. Candidate, University of North Carolina School of Law, 2011. 377

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most