Market Liquidity and Competition Among Designated Market Makers

• 成果类型: Article
• 署名作者: Bellia, Mario; Pelizzon, Loriana; Subrahmanyam, Marti G.; Yuferova, Darya
• 署名单位: European Commission Joint Research Centre; EC JRC ISPRA Site; Goethe University Frankfurt; Universita Ca Foscari Venezia; Centre for Economic Policy Research - UK; New York University; New York University; NYU Shanghai; Norwegian School of Economics (NHH)
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.01801
• 发表日期: 2025
• 页码: 184-201
• 关键词: designated market makers; DMMs; liquidity provision

摘要

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.