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| Author: | Gresse, C. |
| Title: | The effect of crossing-network trading on dealer market's bid-ask spreads |
| Journal: | European Financial Management
2006 : MAR, VOL. 12:2, p. 143-160 |
| Index terms: | stock markets dealer spreads trading networks liquidity transaction costs risk sharing Europe |
| Language: | eng |
| Abstract: | In this article, provided are new insights into market competition btw. traditional exchanges and alternative trading (here as: t-g.) systems in Europe. Dealt with is the relationship btw. the t-g. activity of a crossing network (CN) and the liquidity of a traditional dealer market (DM). Compared are data from the London Stock Exchange's (LSE) SEAQ quote-driven segment and from the POSIT crossing network. It is shown that DM spreads are negatively related to CN executions. Risk-sharing benefits from CN t-g. dominate fragmentation and cream-skimming costs. In addition, risk-sharing gains are found to be related to dealer t-g. in the CN. |
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