The speed increase of stock trading from microseconds to nanoseconds leads to an increase in order cancellations and is otherwise of little value to investors and the general public, a study from University of Illinois has found.
Researchers call these stock exchanges a “zero-sum game” where legitimate traders are essentially subsidising high-frequency traders who cancel orders, reflecting a wealth transfer from low-frequency to high-frequency traders.
Where the majority of trading data were cancellations, it was found that cancelled trades were taking over the system and monopolising resources.
Read more at University of Illinois