{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,10,16]],"date-time":"2026-10-16T10:55:52Z","timestamp":1792148152389,"version":"4.4.0"},"posted":{"date-parts":[[2026]]},"group-title":"SSRN","reference-count":44,"publisher":"Elsevier BV","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"abstract":"<jats:p>When trading reaches the speed of light, does the real economy slow down? Using co-location and latency upgrades at NASDAQ as natural experiments, we find that high-frequency trading (HFT) raises the cost of capital on average. The effect is heterogeneous: HFT increases the cost of capital for low-beta stocks by amplifying systematic risk through correlated trading strategies, while reducing it for the most liquid stocks by lowering the liquidity premium. A complementary test using data from the unfragmented Hong Kong market shows that these causal effects are not driven by market fragmentation and persist across countries and market structures.<\/jats:p>","DOI":"10.2139\/ssrn.6657118","type":"posted-content","created":{"date-parts":[[2026,4,27]],"date-time":"2026-04-27T08:20:51Z","timestamp":1777278051000},"source":"Crossref","is-referenced-by-count":1,"title":["The Speed Premium: High Frequency Trading and the Cost of Capital"],"prefix":"10.2139","author":[{"given":"Matteo","family":"Aquilina","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"ORCID":"https:\/\/orcid.org\/0000-0003-2637-9322","authenticated-orcid":true,"given":"Gbenga","family":"Ibikunle","sequence":"additional","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"ORCID":"https:\/\/orcid.org\/0000-0002-5531-3616","authenticated-orcid":true,"given":"Khaladdin","family":"Rzayev","sequence":"additional","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Xuesi","family":"Wang","sequence":"additional","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"78","reference":[{"key":"ref1","doi-asserted-by":"crossref","first-page":"375","DOI":"10.1016\/j.jfineco.2004.06.007","article-title":"Asset pricing with liquidity risk","volume":"77","author":"V V Acharya","year":"2005","journal-title":"Journal of Financial Economics"},{"key":"ref2","doi-asserted-by":"crossref","DOI":"10.1016\/j.jbankfin.2023.106843","article-title":"Algorithmic trading and market quality: International evidence of the impact of errors in colocation dates","volume":"151","author":"M Aitken","year":"2023","journal-title":"Journal of Banking & Finance"},{"key":"ref3","doi-asserted-by":"crossref","first-page":"31","DOI":"10.1016\/S1386-4181(01)00024-6","article-title":"Illiquidity and stock returns: cross-section and time-series effects","volume":"5","author":"Y Amihud","year":"2002","journal-title":"Journal of Financial Markets"},{"key":"ref4","doi-asserted-by":"crossref","first-page":"1094","DOI":"10.1093\/rfs\/hhac036","article-title":"The effect of stock liuuidity on the firm's investment and production","volume":"36","author":"Y Amihud","year":"2023","journal-title":"The Review of Financial Studies"},{"key":"ref5","doi-asserted-by":"crossref","first-page":"223","DOI":"10.1016\/0304-405X(86)90065-6","article-title":"Asset pricing and the bid-ask spread","volume":"17","author":"Y Amihud","year":"1986","journal-title":"Journal of Financial Economics"},{"key":"ref6","doi-asserted-by":"crossref","first-page":"493","DOI":"10.1093\/qje\/qjab032","article-title":"Quantifying the high-freuuency trading \"arms race","volume":"137","author":"M Auuilina","year":"2022","journal-title":"The Quarterly Journal of Economics"},{"key":"ref7","doi-asserted-by":"crossref","first-page":"1375","DOI":"10.1017\/S0022109017000485","article-title":"Interactions among high-frequency traders","volume":"52","author":"E Benos","year":"2017","journal-title":"Journal of Financial and Quantitative Analysis"},{"key":"ref8","doi-asserted-by":"crossref","first-page":"444","DOI":"10.1086\/295472","article-title":"Capital market equilibrium with restricted borrowing","volume":"45","author":"F Black","year":"1972","journal-title":"The Journal of Business"},{"key":"ref9","doi-asserted-by":"crossref","first-page":"2659","DOI":"10.1017\/S0022109020000782","article-title":"Algorithmic trading and market quality: International evidence","volume":"56","author":"E Boehmer","year":"2021","journal-title":"Journal of Financial and Quantitative Analysis"},{"key":"ref10","doi-asserted-by":"crossref","first-page":"2227","DOI":"10.1093\/rfs\/hhx144","article-title":"The competitive landscape of high-frequency trading firms","volume":"31","author":"E Boehmer","year":"2018","journal-title":"The Review of Financial Studies"},{"key":"ref11","doi-asserted-by":"crossref","first-page":"339","DOI":"10.1146\/annurev-financial-110311-101826","article-title":"The real effects of financial markets","volume":"4","author":"P Bond","year":"2012","journal-title":"Annu. 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