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International Journal of E Government & E Business Research

HIGH-FREQUENCY TRADING IN STOCK MARKETS: SYSTEM ARCHITECTURE, KEY CHALLENGES, AND STRATEGIC OPPORTUNITIES

Akshay Noel Lourd N

Akshay Noel Lourd N, Assistant Professor, Department of Commerce, Loyola College, Chennai 600034, India

DOI : https://doi.org/10.5281/zenodo.19014475 Page No : 01-10

Published Online : 2026-03-14

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ABSTRACT

The stock market has been completely transformed by high-frequency trading (HFT) systems, which make use of cutting-edge technology to carry out a large number of trades at extremely high prices. The armature of high-frequency trading (HFT) systems is investigated in this research article. The paper provides a detailed account of the combination of mechanical and software components that enable rapid-fire data processing and trade prosecution. Important obstacles, such as quiescence, data operation, and nonsupervisory compliance, are thrown around to bring attention to the difficulties that high-frequency trading (HFT) interpreters are likely to encounter. Additionally, the study investigates the opportunities that are given by high-frequency trading (HFT), such as increased request liquidity and efficacy, while also addressing the inherent limitations and ethical problems that are associated with HFT. Through the provision of an exhaustive analysis of the current status of high-frequency trading (HFT) systems, the purpose of this investigation is to provide valuable insight into the impact that these technologies have on ultramodern financial demands and implicit unborn developments.

Keywords: High-frequency trading, stock market architecture, trading challenges, trading opportunities.

REFERENCES

AldridgeIrene,2010,High-FrequencyTrading:APracticalGuidetoAlgorithmic StrategiesandTradingSystems,JohnWiley&Sons.
Brogaard,Jonathan,2010,HighFrequencyTradinganditsImpactonMarketQuality, 5th Annual Conference on Empirical Legal Studies Paper. http://ssrn.com/paper=1641387.
Brownlees,ChristianT.,FabrizioCipollini,andGiampieroGallo,2010,Intra-Daily VolumeModelingandPredictionforAlgorithmicTrading(February2010).SSRN eLibrary. http://ssrn.com/abstract=1393993
Bunge,Jacob,andKristinaPeterson,2010,High-frequencytraderGetcobecomes NYSEmarketmaker,efinancialnews(February2).http://www.efinancialnews.com/ story/2010-02-12/high-frequency-trader-getco-becomes-nyse-market-maker(accessed January 7, 2011).
Chaboud,Alain,ErikHjalmarsson,ClaraVega,andBenChiquoine,2009,Riseofthe Machines:AlgorithmicTradingintheForeignExchangeMarket(FederalReserve International Finance Discussion Paper No. 980), SSRN eLibrary. http://ssrn.com/ paper=1501135 (accessed November 10, 2010).
Chincarini,Ludwig B.,andDaehwanKim,2006,Quantitativeequity portfolio management. An active approach to portfolio construction and management,McGraw-Hill, New York, NY.
DeutscheBoerse,2011,Xetramarketmodel,http://deutsche-boerse.com/dbag/dispatch/de/kir/gdb_navigation/trading/10_trading_platforms/200_xetra/200_market_model(accessed January 28, 2011).
Domowitz,Ian,2002,Liquidity,TransactionCosts,andReintermediationinElectronic Markets,JournalofFinancialServicesResearch,22(1),141-157.
Arnuk,Sal,andJosephSaluzzi,2009,LatencyArbitrage:TheRealPowerBehind Predatory High Frequency Trading. http://www.themistrading.com/article_files/0000/0519/THEMIS_TRADING_White_Paper_--_Latency_Arbitrage_--_December_4 2009.pdf (accessed December 19, 2010).
Ende, Bartholomäus, 2010, IT-Driven Execution Opportunities in Securities Trading:InsightsintotheInnovationAdoptionofInstitutionalInvestors,in:Proceedingsof the18thEuropeanConferenceonInformationSystem (ECIS2010),Pretoria,South Africa.
Ende,Bartholomäus,andMarcoLutat,2010,Trade-throughsinEuropeancross-traded equitiesaftertransactioncosts-empiricalevidencefortheEUROSTOXX50,2nd International Conference: The Industrial Organisation of Securities Markets: Competition, Liquidity and Network Externalities, Frankfurt.
FinancialInsights,2006,MarchingUptheLearningCurve:TheSecondBuySide Algorithmic.TradingSurvey,FinancialInsightsSpecialReport.
Foucault,Thierry,AlisaRoell,andPatrikSandas,2003,Marketmakingwithcostly monitoring:AnanalysisoftheSOEScontroversy,ReviewofFinancialStudies16, 345–384.
Gomber,Peter,MarkusGsell,GregorPujol,andAdrianWranik,2009,Regulationand Technology inEquity Trading–TheImpactofRegulatory andTechnological ChangesonOrderExecutionandthe Trading Venue Landscape inEurope,in P. Engelen,andK.Lannoo,eds.:FacingNewRegulatoryFrameworksinSecurities Trading in Europe.
Groth, Sven, 2011, Does Algorithmic Trading Increase Volatility? Empirical Evidence from the Fully-Electronic Trading Platform Xetra, Forthcoming proceedings of the 10thInternationalConferenceonWirtschaftsinformatik,Zurich.

Cite this Article as : Akshay N.L.N (2026), “High-Frequency Trading in Stock Markets: System Architecture, Key Challenges, and Strategic Opportunities”, International Journal of E-Government & E-Business Research, Vol. 11, Issue 1, 2026, pp 01-10, DOI: https://doi.org/10.5281/zenodo.19014475

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REFERENCES

AldridgeIrene,2010,High-FrequencyTrading:APracticalGuidetoAlgorithmic StrategiesandTradingSystems,JohnWiley&Sons.
Brogaard,Jonathan,2010,HighFrequencyTradinganditsImpactonMarketQuality, 5th Annual Conference on Empirical Legal Studies Paper. http://ssrn.com/paper=1641387.
Brownlees,ChristianT.,FabrizioCipollini,andGiampieroGallo,2010,Intra-Daily VolumeModelingandPredictionforAlgorithmicTrading(February2010).SSRN eLibrary. http://ssrn.com/abstract=1393993
Bunge,Jacob,andKristinaPeterson,2010,High-frequencytraderGetcobecomes NYSEmarketmaker,efinancialnews(February2).http://www.efinancialnews.com/ story/2010-02-12/high-frequency-trader-getco-becomes-nyse-market-maker(accessed January 7, 2011).
Chaboud,Alain,ErikHjalmarsson,ClaraVega,andBenChiquoine,2009,Riseofthe Machines:AlgorithmicTradingintheForeignExchangeMarket(FederalReserve International Finance Discussion Paper No. 980), SSRN eLibrary. http://ssrn.com/ paper=1501135 (accessed November 10, 2010).
Chincarini,Ludwig B.,andDaehwanKim,2006,Quantitativeequity portfolio management. An active approach to portfolio construction and management,McGraw-Hill, New York, NY.
DeutscheBoerse,2011,Xetramarketmodel,http://deutsche-boerse.com/dbag/dispatch/de/kir/gdb_navigation/trading/10_trading_platforms/200_xetra/200_market_model(accessed January 28, 2011).
Domowitz,Ian,2002,Liquidity,TransactionCosts,andReintermediationinElectronic Markets,JournalofFinancialServicesResearch,22(1),141-157.
Arnuk,Sal,andJosephSaluzzi,2009,LatencyArbitrage:TheRealPowerBehind Predatory High Frequency Trading. http://www.themistrading.com/article_files/0000/0519/THEMIS_TRADING_White_Paper_--_Latency_Arbitrage_--_December_4 2009.pdf (accessed December 19, 2010).
Ende, Bartholomäus, 2010, IT-Driven Execution Opportunities in Securities Trading:InsightsintotheInnovationAdoptionofInstitutionalInvestors,in:Proceedingsof the18thEuropeanConferenceonInformationSystem (ECIS2010),Pretoria,South Africa.
Ende,Bartholomäus,andMarcoLutat,2010,Trade-throughsinEuropeancross-traded equitiesaftertransactioncosts-empiricalevidencefortheEUROSTOXX50,2nd International Conference: The Industrial Organisation of Securities Markets: Competition, Liquidity and Network Externalities, Frankfurt.
FinancialInsights,2006,MarchingUptheLearningCurve:TheSecondBuySide Algorithmic.TradingSurvey,FinancialInsightsSpecialReport.
Foucault,Thierry,AlisaRoell,andPatrikSandas,2003,Marketmakingwithcostly monitoring:AnanalysisoftheSOEScontroversy,ReviewofFinancialStudies16, 345–384.
Gomber,Peter,MarkusGsell,GregorPujol,andAdrianWranik,2009,Regulationand Technology inEquity Trading–TheImpactofRegulatory andTechnological ChangesonOrderExecutionandthe Trading Venue Landscape inEurope,in P. Engelen,andK.Lannoo,eds.:FacingNewRegulatoryFrameworksinSecurities Trading in Europe.
Groth, Sven, 2011, Does Algorithmic Trading Increase Volatility? Empirical Evidence from the Fully-Electronic Trading Platform Xetra, Forthcoming proceedings of the 10thInternationalConferenceonWirtschaftsinformatik,Zurich.

Int. J. of E-Gov. & E-Busi Res

HIGH-FREQUENCY TRADING IN STOCK MARKETS: SYSTEM ARCHITECTURE, KEY CHALLENGES, AND STRATEGIC OPPORTUNITIES

Aims and Objectives

Ethics Policy

Peer Review Policy

Call for Paper

Conference

Instruction To Review

Guide To Authors