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|Title: ||Equity Trading Practices and Market Structure: Assessing Asset Managers'
Demand for Immediacy|
|Authors: ||Economides, Nicholas|
Schwartz, Robert A.
|Issue Date: ||Nov-1995|
|Series/Report no.: ||EC-95-08|
|Abstract: ||This paper summarizes the responses to a questionnaire sent to equity
traders through TraderForum of the Institutional Investor. The
respondents manage in total a very significant percentage of equity
assets under management in the United States. The focus of the questions
was the extent of the demand for immediate execution of orders. We found
that the majority of traders are willing to trade patiently if this
reduces execution costs. Many traders indicate that they frequently
delay trades to obtain better prices. Most respondents indicate that
they are typically given more than a day to implement a large order,
that they typically break up more than 20% of their large orders for
execution over time, and that they regularly take more than a day for a
large order that has been broken into lots to be executed completely.
There is a generally positive view of alternative electronic trading
systems, such as Instinet and Investment Technology Group’s POSIT.
The key motives for trading on these systems are reduced market impact,
lower spreads, better liquidity, and anonymity. The respondents indicate
that the key changes that would make alternative electronic systems more
attractive are an increase in execution rates and more convenient times
of trading. The responses to the survey also show that alternative
electronic systems would be used more if the traders did not have soft
|Appears in Collections:||Economics Working Papers|
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