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Key Ideas
The structure of U.S. equity markets has recently been cast into the spotlight of national attention over renewed worries of nefarious activity and bad actors associated with high-frequency trading (HFT). While the current state of the markets certainly bears careful inspection, this evaluation must be done in a holistic fashion to more fully understand where we are today and how we arrived at this point. Stock markets have been continuously evolving since their earliest iterations and at no point in history has the pace of that change been faster than the last two decades. The current market is dominated by rapid, fragmented, and electronic execution, a framework within which high-frequency trading has come to play a significant role. But is this necessarily a bad thing, as some are quick to accuse? Are markets too fast or too complex to allow the institutional and retail investor a fair shake? Is the U.S. stock market truly “rigged?”
