Competition on the Nasdaq and the impact of recent market reforms

• 成果类型: Article
• 署名作者: Weston, JP
• 署名单位: Rice University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/0022-1082.00300
• 发表日期: 2000
• 页码: 2565-2598
• 关键词: bid-ask spreads; execution costs; makers; components; dealer; NYSE

摘要

This paper examines the effect of recent market reforms on the competitive structure of the Nasdaq. Our results show that changes in inventory and information costs cannot explain the post-reform decrease in bid-ask spreads. We interpret this as evidence that the reforms have reduced Nasdaq dealers' rents. Additionally, we find that the difference between NYSE and Nasdaq spreads have been greatly diminished with the new rules. Further, the reforms have resulted in an exit, ceteris paribus, from the industry for market making. Overall, our results provide strong evidence that the reforms have improved competition on the Nasdaq.