Economics, Econometrics and Finance
4 years ago

French tax on high-frequency trading leads to market liquidity decline.

RePEc: Research Papers in Economics
A Reexamination of High Frequency Trading Regulation Effectiveness in an Artificial Market Framework
Iryna Veryzhenko, Lise Arena

Paper Summary

The article examines how a tax on canceling orders in France affects market quality, high-frequency trading, and trading volume. The researchers use a computer simulation to test new market rules. They find that the tax does reduce high-frequency trading and trading volume, but its impact on market quality is unclear.

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