High-frequency trading: Definition, implications, and controversies

High-frequency trading (HFT) is an important component of stock market activity on major exchanges. In the United States, HFT contributed approximately 52% of total equity trading in 2018, with an estimated value of more than US$17 trillion. However, to date, there is no standard definition of HFT, and how it is perceived or viewed depends on the underlying criteria set by regulators. The lack of a uniform identification for HFT leads to problems, such as research complications, that lead to somewhat conflicting conclusions as to the effect of HFT on equity markets in general and the market microstructure in particular. This article presents a survey of the definitions, measurements, mechanisms, empirical evidence, and relevant controversies and issues pertaining to HFT.