Crossing Networks: Competition and Design
TILEC Discussion Paper 2006-015
21 Pages Posted: 13 Jul 2006
Date Written: June 2006
In the past two decades, alternative trading systems started to compete with traditional exchanges. Our paper focuses on one such system: a Crossing Network (CN). First, we discuss the distinct institutional aspects a CN offers compared to traditional markets. Next, we present an overview of the theoretical and empirical literature analyzing their success in competing with traditional markets. Finally, we offer some prospects on the potential outcome of this competition, taking into account market design issues such as the optimal degree of transparency of CNs. We also provide a market practioner's view on the market design of CNs.
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