ECB paper finds value in high-frequency trading

Euro sign, Frankfurt

Despite "largely negative" media coverage, and causing a crash in 2010, high-frequency trading (HFT) has important benefits that may outweigh the costs, according to a working paper published by the European Central Bank (ECB) on November 4.

In the paper: High Frequency Trading and Price Discovery, researchers Jonathan Brogaard, Terrence Hendershott and Ryan Riordan find that high-frequency trades tend to move against investors that trade based on transitory errors, and in the same direction as

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