Effects of Market Reform on the Trading Costs and Depths of Nasdaq Stocks

Michael J. Barclay, William G. Christie, Jeffrey Harris, Eugene Kandel and Paul H. Schultz

Journal of Finance, 1999, vol. 54, issue 1, 1-34

Abstract: The relative merits of dealer versus auction markets have been a subject of significant and sometimes contentious debate. On January 20, 1997, the Securities and Exchange Commission began implementing reforms that would permit the public to compete directly with Nasdaq dealers by submitting binding limit orders. Additionally, superior quotes placed by Nasdaq dealers in private trading venues began to be displayed in the Nasdaq market. We measure the impact of these new rules on various measures of performance, including trading costs and depths. Our results indicate that quoted and effective spreads fell dramatically without adversely affecting market quality.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (86)

Downloads: (external link)
https://doi.org/10.1111/0022-1082.00097

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:54:y:1999:i:1:p:1-34

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().