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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/14226
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| Title: | ELECTRONIC TRADING SYSTEMS: STRATEGIC IMPLICATIONS OF MARKET DESIGN CHOICES |
| Authors: | Levecq, Hugues
Weber, Bruce W. |
| Issue Date: | 3-Mar-1995 |
| Publisher: | Stern School of Business, New York University |
| Series/Report no.: | IS-95-19 |
| Abstract: | Modern financial markets compete aggressively for trading activity and
investor interest. Information technology, once a crucial element in
streamlining paper flows and operations, is now a strategic resource
used in attracting or retaining market liquidity. Established exchanges
introduce technology to enhance their markets. New market venues
challenge the status quo and rely on technology to offer diverse
services to increasingly sophisticated investors. In this paper, we
examine the strategic design decisions embedded in these new electronic
trading systems. Design decisions are critical, as they determine the
market microstructure which influences investing strategies, patterns of
trade, liquidity and volatility. We propose a taxonomy of design
alternatives based on six major dimensions: market structure, type of
orders, order execution priority rules, price discovery rules, time
stamping, and transparency. Using examples of existing systems, we
discuss the potential impact of the various alternatives on the eventual
attractiveness of the market to the investors. |
| URI: | http://hdl.handle.net/2451/14226 |
| Appears in Collections: | IOMS: Information Systems Working Papers
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