Although the banking sector sees high-frequency trading as beneficial and most academic studies indicate it should improve overall market quality, Dr Kwan and Dr Philip’s research confirms the unease among traditional punters and regulators that high-frequency trading may have a toxic effect on the market.
Kwan A, Masulis R and McInish TH. (2015), ‘Trading rules, competition for order flow and market fragmentation’. Journal of Financial Economics, vol.115:2, pp. 330-48.