The declining role of NASDAQ market makers

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4 Scopus citations

Abstract

We compare the liquidity providing behavior of NASDAQ market makers in 2010 to their behavior in 2004. We examine how frequently market makers are at the inside quote, what market and stock specific factors influence market makers' behavior, and the relation between market maker participation and intraday bid-ask spread patterns. We observe a decrease in the percent of the trading day dealers' quote at the inside, a decline in the number of market makers, and a decrease in the influence market makers have on intraday spread patterns. The results suggest that the role of NASDAQ market makers declines over time.

Original languageEnglish
Pages (from-to)461-480
Number of pages20
JournalThe Financial Review
Volume49
Issue number3
DOIs
StatePublished - Aug 2014

Keywords

  • Bid-ask spreads
  • Dealer markets
  • Market structure
  • NASDAQ market makers
  • NASDAQ trading
  • asked price
  • organizational behavior
  • securities markets
  • spread
  • studies

EGS Disciplines

  • Finance and Financial Management

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