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Unpublished Paper
Canceling the Order: How High Frequency Traders are Disrupting the Derivatives Market, and What the Regulators Can Do to Stop Them
ExpressO (2014)
  • Andrew C Burr
Abstract
High Frequency Trading (“HFT”) is now a part of the modern financial lexicon, and inspires feelings of awe, fear, and ignorance. While millions of investors around the world are still trying to grapple with what exactly HFT is and does, the U.S. regulators who are tasked with investigating and charging manipulators are finding themselves in a quandary of how to prosecute the offenders. Further, while the media has focused its attention on the U.S. Securites Exchange Commission’s (“SEC”) new policies on the subject, few have noticed the progress made by the U.S. Commodity Futures Trading Commission (“CFTC”), and how the two commissions differ with their statutory regulations regarding manipulation. This paper will discuss the history and evolution of HFT, the strategies employed by HFT traders with a focus on order cancelation, and the current and proposed rules that regulate HFT. By taking an in-depth review of the few cases filed by the CFTC and SEC against HFT manipulators, this paper will also demonstrate what changes ought to be made to the current regulatory regime.
Keywords
  • High Frequency Trading,
  • HFT,
  • market manipulation,
  • CFTC,
  • SEC
Publication Date
April 4, 2014
Citation Information
Andrew C Burr. "Canceling the Order: How High Frequency Traders are Disrupting the Derivatives Market, and What the Regulators Can Do to Stop Them" ExpressO (2014)
Available at: http://works.bepress.com/andrew_burr/1/