{"title":"Do Multilateral Trading Facilities Contribute to Market Quality?","authors":"Ryan Riordan, Andreas Storkenmaier, M. Wagener","doi":"10.2139/ssrn.1852769","DOIUrl":null,"url":null,"abstract":"The introduction of the Markets in Financial Instruments Directive (MiFID) ended the quasi-monopoly of traditional exchanges and enabled alternative platforms, so-called multilateral trading facilities (MTF), to compete for order flow. European regulation imposes neither a formal linkage nor a consolidated market record. This raises questions about the contribution to market quality of MTFs in an increasingly fragmented trading environment. We find that Chi-X, an MTF, contributes most to the price discovery process. Chi-X is competitive in liquidity supply and posts the tightest quoted spreads. Our results suggest that MTFs contribute positively to market quality and that investors benefit from competition.","PeriodicalId":135286,"journal":{"name":"ERN: Regulation of Financial Markets (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2011-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"35","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"ERN: Regulation of Financial Markets (Topic)","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.1852769","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 35
Abstract
The introduction of the Markets in Financial Instruments Directive (MiFID) ended the quasi-monopoly of traditional exchanges and enabled alternative platforms, so-called multilateral trading facilities (MTF), to compete for order flow. European regulation imposes neither a formal linkage nor a consolidated market record. This raises questions about the contribution to market quality of MTFs in an increasingly fragmented trading environment. We find that Chi-X, an MTF, contributes most to the price discovery process. Chi-X is competitive in liquidity supply and posts the tightest quoted spreads. Our results suggest that MTFs contribute positively to market quality and that investors benefit from competition.