Electronic Communication Networks and Liquidity on the NASDAQ
Posted: 8 Mar 2003
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: Suggested Citation