RT Journal Article
SR Electronic
T1 Competition Between High- and Low-Accuracy Trading Platforms
JF The Journal of Trading
FD Institutional Investor Journals
SP 10
OP 16
DO 10.3905/JOT.2009.4.3.010
VO 4
IS 3
A1 Erik Benrud
YR 2009
UL https://pm-research.com/content/4/3/10.abstract
AB This article develops a model where trading platforms compete with the fee charged for trading and the price accuracy of trades. The model has a stable equilibrium, which demonstrates how an increase in the number of traders or an increase in their desire for accuracy will increase the levels of accuracies offered by the platforms and that the levels of accuracy will become more dispersed. An increase in the cost of increasing accuracy will lower accuracy for both firms and the accuracies will become less dispersed. Additional analysis demonstrates how exogenous shifts affect the fees and profits.TOPICS: Exchanges/markets/clearinghouses, statistical methods, risk management