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Proposed Analysis in Financial Marketplace Simulation Essay

Project id 1012025
Subject area Other
Document type Essay
Words 1781
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With the broadly emerging electronic systems in financial marketplace for the exchange of most types of economic instruments (we.e. securities, derivatives, commodities and futures), the digital centralized order book is among the most standard market system for cost discovery in today’s economic markets. As a total result, many investors make use of algorithmic trading to instantly make trading decisions right now, submit orders, and take care of those orders after submission. Algorithmic trading is the use of computer software to help with making and perform trading decisions predicated on some pre-programmed pc algorithms [1]. According to a written report by Reuters and Bloomberg, algorithmic trading makes up about over 73% of U.S. collateral volumes in 2011. The widely usage of algorithmic trading has wide impacts on the monetary markets. The consequences of algorithmic trading specifically high-frequency trading (one kind of algorithmic trading which is usually seen as a its short portfolio keeping periods [2]) available price balance has been more popular because the event of ‘Flash Crash’ in the E-Mini S&P futures marketplace which occurred on, may 6, 2010. The 2010 Flash Crash was reported to be initiated by an unusually large numbers of E-Mini S&P 500 contracts selling of a sizable mutual fund in a joint survey by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The report detailed the way the large sell exhausted available customers and the way the high-frequency investors (HFT) started aggressively offering, accelerating the result of the mutual fund’s selling and adding to the sharp cost drop that day [3]. Following this event, a various number of policies have already been proposed to create ‘circuit breakers’ and invite markets to r...

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