This report discusses how high frequency trading (HFT) has changed the dynamics of the market and whether traditional academic measures of market “quality” are relevant in the new world of electronic trading. Using existing measures of market quality, which were designed over 20 years ago, much of the academic literature suggests HFT is beneficial for...

The net effects of algorithmic and high-frequency traders mask considerable heterogeneity in how they impact institutional transaction costs. The paper finds that fast traders and those with high order-to-trade ratios are no more likely to increase costs than others. Traders that increase costs are more active in small stocks.

Executive Summary A tax on financial transactions, or 'Tobin' tax, could protect superannuation investors, improve the operation of Australia’s capital markets and provide a source of tax revenue worth over $1 billion per year. Protecting investors