The Post-Reform Disparity between NASDAQ and the NYSE

Posted: 28 Jun 2002

See all articles by Yan He

Yan He

Indiana University Southeast - School of Business

Chunchi Wu

SUNY at Buffalo - School of Management

Abstract

We report further evidence of the difference in execution costs between Nasdaq and the NYSE before and after the 1997 market reforms. We find that informed trading costs are consistently higher on Nasdaq both before and after the reforms. In the pre-reform period the Nasdaq-NYSE disparity in bid-ask spreads cannot be completely attributed to the difference in informed trading costs. However, in the post-reform period the spread difference between these two markets becomes insignificant with the effect of informed trading costs controlled. Our findings are consistent with the contention that the reforms have largely reduced noninformation trading costs and dealers' rents.

JEL Classification: G1

Suggested Citation

He, Yan and Wu, Chunchi, The Post-Reform Disparity between NASDAQ and the NYSE. Available at SSRN: https://ssrn.com/abstract=314463

Yan He

Indiana University Southeast - School of Business ( email )

4201 Grant Line Road
New Albany, IN 47150
United States
812-941-2308 (Phone)
812-941-2672 (Fax)

Chunchi Wu (Contact Author)

SUNY at Buffalo - School of Management ( email )

Jacobs Management Center
Buffalo, NY 14222
United States

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