Areas of Expertise (8)
Market Microstructure
Electronic Trading
Market Making
Algorithmic Trading
High-frequency Trading
Over-the-counter Markets
Information Technology in Financial Markets
Financial Market Regulation
About
Terrence "Terry" Hendershott chaired the NASDAQ Economic Advisory Board and served as a visiting economist at the New York Stock Exchange. His work spans a range of financial instruments trading on exchanges and over the counter in the U.S. and internationally. He is an expert on the structure, design, and regulation of financial markets and how market participants—such as market makers, high-frequency traders, and institutional investors—affect price discovery and liquidity. His research also focuses on the competition between electronic and traditional markets and the role of information technology in those markets. His numerous honors include best paper awards from the Review of Financial Studies and the Financial Review and NYSE and NASDAQ best paper awards on equity trading and market microstructure, respectively. He has served as an associate editor for Management Science, the Journal of Financial Markets, and Information Systems Research.
Education (2)
Graduate School of Business, Stanford University: PhD, Operations, Information, and Technology
Miami University: BS, Mathematics and Statistics
Links (3)
Honors & Awards (6)
Michael J. Brennan Best Paper Award
Awarded for best paper published in Review of Financial Studies 2014
Financial Review Outstanding Publication Award
2014
Philip Brown Prize
2013
New York Stock Exchange Euronext Award
Awarded for the best paper on equity trading, Western Finance Association Meetings 2001, 2008
Nasdaq Award for best paper on market microstructure, Financial Management Association
2007
Schwabacher Fellowship Award
2005 – 2006
Positions Held (1)
At Haas since 2001
2020 – Faculty Director, Master of Financial Engineering Program 2017 – present, Willis H. Booth Chair in Banking and Finance, Haas School of Business 2012 – 2017, Cheryl and Christian Valentine Chair, Haas School of Business 2011 - 2012, Barbara and Gerson Bakar Faculty Fellow, Haas School of Business 2005 – 2006, Visiting Economist, New York Stock Exchange 1999 – 2001, Xerox Assistant Professor of Computers & Information Systems, Simon School of Business Administration, University of Rochester
Media Appearances (6)
The long view
San Francisco Business Times online
2021-01-22
In this article about Eric Ries' plan to take on Wall Street with a new "long term stock exchange," Prof. Terrence Hendershott, the Willis H. Booth Chair in Banking and Finance II, said that investors often support a company's long-term plan if the vision is clear.
Insiders explain how fractional-share trading went from fringe to must-have — and who's actually doing it in an industry where everyone wants to be an early mover
Business Insider online
2020-02-19
Trading stock slivers is a new trend. Prof. Terrence Hendershott, the Willis H. Booth Chair in Banking and Finance II, says fractional shares forge diversified portfolios, making the risk taken on by brokers rather small. "It's hard to see how this is going to be a big money-maker right from the get-go," he said.
Fans Flip Out Over NFL’s Rule on Coin Toss and Overtime. Is It Fair?
The Wall Street Journal online
2019-02-01
Research by Terrence Hendershott, a finance professor at the University of California, Berkeley, made the case that the NFL should auction off possession in overtime games with teams bidding on who gets the ball first using starting position as currency. The team whose bid is farthest from its target end zone wins the auction.
HFT mixed bag for retail investors say experts
Forbes online
2018-09-24
Mom-and-pop investors are both helped and hurt by high-frequency traders. But Terrence Hendershott cautioned that if the SEC tried to regulate HFTers, they would find loopholes.“If we are going to regulate it, everyone will try to find ways to avoid being labeled as a high-frequency trader,” he said.
INSIGHTS: Meet The Next Generation of TCA
Traders online
2016-06-16
When properly constructed, market microstructure analytics (MMA) provide an enhanced version of Transaction Cost Analysis (TCA) offering insight into execution quality...
SEC shouldn't approve IEX until Reg NMS is re-examined
The Hill online
2016-03-18
Is slower better? The debate around IEX's application to become a public exchange seems to have coalesced around this simple question. If you believe automation and high frequency trading (HFT) are bad because they are fast, then it may seem obvious to slow everyone down. IEX designed its proposed exchange to include an intentional 350 microsecond delay for incoming and outgoing information, which sounds sensible enough to the investors feeling outrun.
Selected Research Grants (3)
The effect of technological and regulatory changes on market structure and transparency across equity and fixed-income markets in the US and Europe
Norwegian Finance Initiative (NFI)
Feb 2018
Entrepreneurship & Innovation Research Grant
Kauffman Foundation
2008-2009
Selected Papers & Publications (11)
Price Discovery without Trading: Evidence from Limit Orders
Journal of Finance
Terrence Hendershott, Jonathan Brogaard, and Ryan Riordan
2018
Short Selling and Price Discovery in Corporate Bonds
Journal of Financial and Quantitative Analysis
Terrence Hendershott, Roman Kozhan, and Vikas Raman
2018
High Frequency Trading and the 2008 Short Sale Ban
Journal of Financial Economics
Terrence Hendershott, Jonathan Brogaard, and Ryan Riordan
2017
Are Institutions Informed about News?
Journal of Financial Economics
Terry Hendershott, Dmitry Livdan, and Norman Schürhoff
2015
Click or Call? Auction versus Search in the Over-the-Counter Market
Journal of Finance
Terry Hendershott and Ananth Madhavan
2015
Price Pressures
Journal of Financial Economics
Terrence Hendershott and Albert J. Menkveld
2014
High-Frequency Trading and Price Discovery
Review of Financial Studies
Terrence Hendershott, Jonathan Brogaard, and Ryan Riordan
2014
Does Algorithmic Trading Improve Liquidity?
Journal of Finance
Terrence Hendershott, Charles Jones, and Albert Menkveld
2011
Automation Versus Intermediation: Evidence from Treasuries Going Off the Run
Journal of Finance
Terrence Hendershott, Michael Barclay, and Kenneth Kotz
2006
Competition Among Trading Venues: Information and Trading on Electronic Communications Network
Journal of Finance
Terrence Hendershott, Michael Barclay, and Tim McCormick
2003
Crossing Networks and Dealer Markets: Competition and Performance
Journal of Finance
Terrence Hendershott and Haim Mendelson
2000
Teaching (3)
High Frequency Finance
MFE
Introduction to Business Analytics
Undergraduate
Past Courses:
Analytic Decision Modeling Using Spreadsheets Information Technology Strategy Operations Management