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 language | English |
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Pages (from-to) | 461-480 |
Number of pages | 20 |
Journal | The Financial Review |
Volume | 49 |
Issue number | 3 |
DOIs | |
State | Published - 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