Off-Exchange Market Makers and Their Best Execution Obligations: An Evolving Mixture of Market Reform, Regulatory Enforcement, and Litigation
NYU Journal of Law & Business, Vol. 17, No. 3, pp. 477-545, 2021
70 Pages Posted: 18 Feb 2021 Last revised: 27 Aug 2021
Date Written: August 26, 2021
This Article analyzes the reach of the duty of best execution to off-exchange market makers and its implications in the evolving equity market structure. The Article covers such key themes as a comparative regulatory perspective on the source of the duty of best execution and business practices in off-exchange market making, recent enforcement actions involving off-exchange market makers, the reformed market data infrastructure, IEX’s D-Limit order type, stress-testing of price improvement practices, and the feasibility of a common methodology for calculating damages in best execution class actions.
Keywords: off-exchange market makers, best execution, market data infrastructure, MiFID II, payment for order flow, price improvement
JEL Classification: G18, K22
Suggested Citation: Suggested Citation