Do competition and incentives offered to designated market makers (DMMs) improve market liquidity? We employ data from NYSE Euronext Paris to show that exogenous changes in contract design lead to significant decreases in quoted and effective spreads. In particular, market liquidity increases the most for stocks with the largest increase in competition among DMMs. Our analysis shows that competition among DMMs is an important aspect of contract design, along with elements such as rebates and requirements.
Market Liquidity and Competition Among Designated Market Makers
Bellia, Mario;Pelizzon, Loriana;Subrahmanyam, Marti G.;
2025
Abstract
Do competition and incentives offered to designated market makers (DMMs) improve market liquidity? We employ data from NYSE Euronext Paris to show that exogenous changes in contract design lead to significant decreases in quoted and effective spreads. In particular, market liquidity increases the most for stocks with the largest increase in competition among DMMs. Our analysis shows that competition among DMMs is an important aspect of contract design, along with elements such as rebates and requirements.
File in questo prodotto:
| File | Dimensione | Formato | |
|---|---|---|---|
|
bellia-et-al-2024-market.pdf
accesso aperto
Descrizione: market liquidity
Tipologia:
Versione dell'editore
Licenza:
Accesso gratuito (solo visione)
Dimensione
2.82 MB
Formato
Adobe PDF
|
2.82 MB | Adobe PDF | Visualizza/Apri |
I documenti in ARCA sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
