Electronic Communication Networks and Liquidity on the NASDAQ

Posted: 8 Mar 2003

See all articles by James Weston

James Weston

Rice University - Jesse H. Jones Graduate School of Business

Abstract

This paper examines the growth of electronic communication networks (ECNs) and their impact on the liquidity of Nasdaq stocks. I find that the recent growth of trading through ECNs has resulted in tighter bid-ask spreads, greater depths, and less concentrated markets. Overall, our results support the hypothesis that electronic communication networks have improved Nasdaq liquidity.

Keywords: Bid-ask spread, liquidity, ECN, Nasdaq

Suggested Citation

Weston, James Peter, Electronic Communication Networks and Liquidity on the NASDAQ. Journal of Financial Services Research, Vol. 22, Nos. 1&2, August/October 2002. Available at SSRN: https://ssrn.com/abstract=382960

James Peter Weston (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005
United States
713-348-4480 (Phone)
713-348-6331 (Fax)

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