Abstract

https://ssrn.com/abstract=2895222
 


 



When to Introduce Electronic Trading Platforms in Over-the-Counter Markets?


Sebastian Vogel


Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute

January 19, 2017


Abstract:     
I study a hybrid over-the-counter (OTC) market structure in which traders have the choice of obtaining an asset either in a bilateral market or on an electronic trading platform. In a hybrid market (HM), turnover is higher and expected prices are lower than in a pure bilateral market (PBM). I present sufficient conditions under which dealers' profits are higher in the HM than in the PBM and vice versa. Dealers can increase their profits in the HM by colluding to keep their activity on the platform at a certain level.

Number of Pages in PDF File: 71

Keywords: OTC markets, electronic trading, search, market design, efficiency

JEL Classification: D43, D44, D47, D61, D82, D83, G12, G14


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Date posted: January 10, 2017 ; Last revised: January 20, 2017

Suggested Citation

Vogel, Sebastian, When to Introduce Electronic Trading Platforms in Over-the-Counter Markets? (January 19, 2017). Available at SSRN: https://ssrn.com/abstract=2895222 or http://dx.doi.org/10.2139/ssrn.2895222

Contact Information

Sebastian Vogel (Contact Author)
Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute ( email )
Quartier UNIL-Dorigny, Bâtiment Extranef, # 211
40, Bd du Pont-d'Arve
CH-1015 Lausanne, CH-6900
Switzerland

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