Dealers as Record Keepers

Vincent Maurin and John Chi-Fong Kuong
Additional contact information
Vincent Maurin: HEC Paris - Finance Department; Swedish House of Finance
John Chi-Fong Kuong: The Chinese University of Hong Kong (CUHK) - CUHK Business School; Centre for Economic Policy Research (CEPR); Finance Theory Group (FTG)

No 1626, HEC Research Papers Series from HEC Paris

Abstract: Trading relationships in over-the-counter (OTC) markets are persistent and often exclusive, despite technological advances that have expanded clients' access to dealers. We rationalize this pattern in a model where trading relationships allow dealers to learn their clients' trading motives from their trading records. Relationship dealers set record-contingent quotes, generating price discrimination that mitigates adverse selection for liquidity-driven clients. Moreover, we show that clients prefer exclusive relationships to keep their record private. As a result, post-trade transparency and trading protocols that facilitate public inference of clients' trading records by dealers (e.g., Request for Quote relative to Request for Market) may reduce gains from trade.

Keywords: OTC Markets; Relationship Trading; Trading Record; Transparency (search for similar items in EconPapers)
JEL-codes: G10 G14 G18 G23 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2026-02-19
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6165406 Full text (text/html)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

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:ebg:heccah:1626

DOI: 10.2139/ssrn.6165406

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 1 Rue de la Libération, 78350 Jouy-en-Josas, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ( this e-mail address is bad, please contact ).