Question

should High Frequency trading be more regulated or not and explain why it should or shouldn't be more regulated ?

Answer 1

Answer:

High frequency trading- This is a modern technique of trading that uses computer programs and software and with the help of which, executes large number of orders/trade in a single time. It is automated trading platform, mainly used by investment banks, hedge funds, institutional investors etc. This platform executes large number of orders in very less time with high frequency. This system analyzes the market trends by using algorithms.

Regulation of High frequency trading- High frequency trading should be regulated. Below are the reasons for regulation of high frequency trading:

Risky trading- HFT has the systematic or market risk it may be due to technological deficiencies or algorithms problems. Price fluctuation is there, anytime if there is big market crash or something then only regulator controls and imposes some restrictions. Regulation is needed to check the speculation or malpractices. HFT can be used for price manipulation so regulation will check that manipulation.

HFT requires different regulations than the normal trading. Regulation on HFT is very important for controlling the frauds, malpractices and manipulation, it is needed to make the HFT transparent, effective and fair.