Date of Award

Spring 5-2016

Degree Type

Honors College Thesis

Department

Finance, Real Estate, and Business Law

First Advisor

Kimberly Goodwin

Advisor Department

Finance, Real Estate, and Business Law

Abstract

Although high frequency trading (HFT) makes up a large portion of day to day trading activity in US and global markets, Khashanah and colleagues (2014) found that nearly half of academic and business industry professionals feel that HFT provides an unfair advantage relative to other market participants, and that a majority of industry professionals share concerns that HFT increases volatility in markets. This creates an environment wherein there are increasing calls by various groups for increased regulation of HFT, and the same study by Khashanah et al (2014) finds that 59% of academics and 46% of industry professionals are of this opinion. The current study was designed to further examine perceptions of HFT, particularly with regards to its effects on volatility and further regulation, among a younger generation of respondents. By replicating the survey distributed by Khashanah and colleagues, this study aims to shed light on the opinions business students hold regarding HFT and draw comparisons between the industry professionals and academics and the results garnered here. Participants were asked to respond to a twelve question survey that asked for opinions about liquidity, price discovery, market crashes, and then respond to what they think an appropriate level of regulation for HFT should be. A Poisson regression analysis model was utilized in order to ascertain certain underlying trends in the data, and found correlations between major, age, and financial experience with negative perceptions of HFT.

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