Abstract
A high frequency trader is a special type of trader that operates in stock exchanges with all the other traders. These high frequency traders are systematically causing inefficiency to grow within the exchange and are hurting all other traders. Without implementing a new trading system or new regulations the market will continue to be inefficient. This paper explains how high frequency traders are different from all other traders currently operating in the stock exchange. The paper also shows how they make their profits and how they make the market more inefficient. Solutions to the inefficiency problem are examined using theoretical models created by past researchers. The high frequency traders break the Famma’s efficient market hypothesis by having a type of information that only they can ever act on. To fix the inefficiency without adding any others, we need to switch from the continuous double auction to the frequent batch auction
Advisor
Tian, Huiting
Second Advisor
Mellizo, Philip
Department
Business Economics
Recommended Citation
Hull, Nicholas, "Has Fama’s Efficient Market Hypothesis been Proven False Due to High Frequency Traders?" (2020). Senior Independent Study Theses. Paper 8996.
https://openworks.wooster.edu/independentstudy/8996
Disciplines
Business
Keywords
High Frequency
Publication Date
2020
Degree Granted
Bachelor of Arts
Document Type
Senior Independent Study Thesis
© Copyright 2020 Nicholas Hull