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High frequency trading

SUMMARY: High-frequency traders have been paying to get direct access to market-moving news releases, a practice that can give firms the ability to trade fractions of a second ahead of less fleet-footed investors. The traders are getting news releases from Business Wire, which distributes corporate-earnings releases and economic reports such as the Philadelphia Federal Reserve's monthly manufacturing survey and from Marketwired, a Toronto company that distributes earnings releases and the ADP monthly employment report.


1. Do you think regulators should step in? Why or why not?
2. How can ordinary investors protect themselves against losses at the hands of high-frequency traders using this tactic?

Solution Preview

1. Yes, regulators should step in to prevent undue advantage to such high frequency traders who can often manipulate stock prices via their volumes and make it difficult for ordinary investors and traders to make profits. The undue ...

Solution Summary

This solution discusses the role of regulators in stopping undue advantage to high frequency traders. It also discusses strategies that ordinary investors can pursue to avoid losses.