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Dark pools et trading haute fréquence : une évolution utile ?

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  • Fany Declerck
  • Laurence Lescourret

Abstract

Technological innovation and regulatory changes have favored the development of two growing phenomena associated with increased opacity in financial markets : dark pools and high-frequency trading (HFT). One out of every two transactions now emanates from HFT. Dark pools now attract 10 % of total trading volume in Europe and 20 % in United States, due to high frequency traders? attempt to profit from uninformed investors who trade in these venues. Empirical studies show that transaction costs are at historical lows due to the competitive pressure of HTF. However, transaction costs have been unchanged since 2009 even though speed continues to increase. Market efficiency has improved through HFT arbitrage activity. Nevertheless, as more and more trading volume moves into dark pools, the risk of deterioration in market liquidity and efficiency will increase. This evolution also has implications in terms of competition distortion, operational risks, and technological risks. Overall, dark pools and HFT pose significant challenges to market regulators. Classification JEL: D40, D53, D62, G14, G20, L10.

Suggested Citation

  • Fany Declerck & Laurence Lescourret, 2015. "Dark pools et trading haute fréquence : une évolution utile ?," Revue d'économie financière, Association d'économie financière, vol. 0(4), pages 113-126.
    • Handle: RePEc:cai:refaef:ecofi_120_0113
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    Cited by:

    1. Declerck, F., 2016. "High-frequency trading, geographical concerns and the curvature of the Earth," Financial Stability Review, Banque de France, issue 20, pages 153-160, April.

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    More about this item

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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