Brokered versus dealer markets: Impact of proprietary trading with transaction fees

被引:0
作者
Nishide, Katsumasa [1 ]
Tian, Yuan [2 ]
机构
[1] Hitotsubashi Univ, Grad Sch Econ, 2-1 Naka, Kunitachi, Tokyo 1868601, Japan
[2] Ryukoku Univ, Fac Econ, 67 Tsukamoto cho,Fushimi ku, Kyoto, 6128577, Japan
关键词
Proprietary trading; Dealer; brokered market; Transaction fees;
D O I
暂无
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
In this study, we consider a one-period financial market with a dealer/broker and an infinite number of investors. While the dealer who trades on his own account (with proprietary trading) simultaneously sets both the transaction fee and the asset price, the broker who brings investors' orders to the market (with no proprietary trading) sets only the transaction fee, given that the price is determined according to the market-clearing condition among investors. We analyze the impact of proprietary trading on the asset price, transaction fee, trading volume, and the welfare of investors. We find that the bid and ask prices set by the dealer who can engage in proprietary trading are more favorable to average investors. As a result, both the trading volume and the transaction fee increase, and social welfare improves.
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页数:13
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