UOIT Assistant Professor to participate high-frequency trading impact study

Dr. Ryan Riordan, Assistant Professor, Faculty of Business and Information Technology (FBIT) at the University of Ontario Institute of Technology (UOIT),  is one of several professors from across North American who will participate in a two-part project to assess the impact of high-frequency trading (HFT) and related activity on Canadian marketplaces. The project is the final stage of research into HFT being conducted by the Investment Industry Regulatory Organization of Canada (IIROC).

HFT involves using sophisticated technological tools and computer algorithms to rapidly trade securities. The goal is to conduct multiple trades and capture a small profit – sometimes a fraction of a cent – on each transaction.

In December 2012 the IIROC published the results of the first two phases of its research, which initially attempted to define highly active traders and analyze their trading activity. This third phase, in which Dr. Riordan will participate, will look at the impact of trading activity on the markets themselves.

For the first project, Dr. Riordan will work with Dr. Terrence Hendershott, Associate Professor, Haas School of Business, University of California, Berkeley, as well as Dr. Jonathan Brogaard, Assistant Professor, Finance, University of Washington’s Foster School of Business. They will investigate the role of HFT firms in integrating fragmented markets, including their role in transmitting information, liquidity provision, contagion and inventory risk management across multiple trading venues.

For the second project, Dr. Andriy Shkilko, Associate Professor, Finance and Director, Financial Services Research Centre, Wilfrid Laurier University’s School of Business and Economics, will join Dr. Riordan to study how short selling affects the functionality of Canadian securities markets.

The third phase of research is expected to be completed by the end of 2014.