EconPapers    
Economics at your fingertips  
 

Payments for Order Flow on Nasdaq

Eugene Kandel () and Leslie Marx

Journal of Finance, 1999, vol. 54, issue 1, 35-66

Abstract: We present a model of Nasdaq that includes the two ways in which marketmakers compete for order flow: quotes and direct payments. Brokers in our model can execute small trades through a computerized system, preferencing arrangements with marketmakers, or vertical integration into market making. The comparative statics in our model differ from those of the traditional model of dealer markets, which does not capture important institutional features of Nasdaq. We also show that the empirical evidence is inconsistent with the traditional model, which suggests that preferencing and vertical integration are important components in understanding Nasdaq.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (25) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/0022-1082.00098

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:35-66

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 ().

 
Page updated 2021-04-01
Handle: RePEc:bla:jfinan:v:54:y:1999:i:1:p:35-66