Competition/Fragmentation in Equities Markets: A Literature Survey

Gomber, Peter ; Sagade, Satchit ; Theissen, Erik ; Weber, Moritz Christian ; Westheide, Christian

Document Type: Working paper
Year of publication: 2013
The title of a journal, publication series: SAFE Working Paper
Volume: 35
Place of publication: Rochester, NY
Publication language: English
Institution: Business School > ABWL u. Finanzierung (Theissen 2009-)
Subject: 330 Economics
Abstract: Advances in technology and several regulatory initiatives have led to the emergence of a competitive but fragmented equity trading landscape in the US and Europe. While these changes have brought about several benefits like reduced transaction costs, regulators and market participants have also raised concerns about the potential adverse effects associated with increased execution complexity and the impact on market quality of new types of venues like dark pools. In this article we review the theoretical and empirical literature examining the economic arguments and motivations underlying market fragmentation, as well as the resulting implications for investors' welfare. We start with the literature that views exchanges as natural monopolies due to presence of network externalities, and then examine studies which challenge this view by focusing on trader heterogeneity and other aspects of the microstructure of equity markets.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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