Download This PaperOne for the Money, Two for the Show?The Number of Designated Market Makers and Liquidity
15 Pages Posted: 27 Aug 2022
There are 2 versions of this paper
One for the Money, Two for the Show?The Number of Designated Market Makers and Liquidity
Number of pages: 15
Posted: 27 Aug 2022
You are currently viewing this paper
Downloads
46
One for the Money, Two for the Show?The Number of Designated Market Makers and Liquidity
Number of pages: 15
Posted: 27 Aug 2022
Downloads
15
Abstract
Prior research has established that the presence of designated market makers (DMMs) in an electronic open limit order book increases liquidity. We analyze whether the presence of additional DMMs results in a further improvement in liquidity. Using data from Deutsche Börse’s Xetra system we find that increases in the number of DMMs significantly improve liquidity, and vice versa for decreases in the number of DMMs. Our results are confirmed when we use an instrumental variables approach to overcome potential endogeneity issues.
Keywords: Designated market makers, Liquidity
Suggested Citation: Suggested Citation
Theissen, Erik and Westheide, Christian, One for the Money, Two for the Show?The Number of Designated Market Makers and Liquidity. Available at SSRN: https://ssrn.com/abstract=4202201 or http://dx.doi.org/10.2139/ssrn.4202201
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.