Document Type
Blog Post
Publication Date
3-11-2014
Contents
Arbitrage is, essentially, taking advantage of mispricing across (or within) markets to earn a risk-free profit. In an efficient market, such opportunities would be rare. A recent Fed report (see article here, Bloomberg) finds that high frequency traders have effectively reduced the number of arbitrage opportunities, thereby improving market efficiency.
Recommended Citation
Dolvin, Steven D., "High Frequency Trading and Market Efficiency" (2014). All Chapters. 97.
https://digitalcommons.butler.edu/jmdallchapters/97