High-Frequency Trading and the Execution Costs of Institutional Investors

This paper studies whether high-frequency trading (HFT) increases the execution costs of institutional investors. We use technology upgrades that lower the latency of the London Stock Exchange to obtain variation in the level of HFT over time. Following upgrades, the level of HFT increases. Around these shocks to HFT institutional traders’ costs remain unchanged. We find no clear evidence that HFT impacts institutional execution costs.

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Year of publication:	2014
Authors:	Goldstein, Michael ; Brogaard, Jonathan ; Hendershott, Terrence ; Hunt, Stefan ; Ysusi, Carla
Published in:	The Financial Review. - Eastern Finance Association - EFA. - Vol. 49.2014, 2, p. 345-369
Publisher:	Eastern Finance Association - EFA

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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