Competition on the Nasdaq and the growth of electronic communication networks

Do we need a European 'National Market System'? Competition, Arbitrage, and Suboptimal Executions

“…Degryse, de Jong, and van Kervel (2011) There are a number of papers studying competition between traditional exchanges and ECNs in the U.S. Over the last decade, ECNs captured a significant fraction of trading volume, especially in Nasdaq-listed stocks. Findings support the view that competition between ECNs and Nasdaq market makers has significantly reduced quoted and effective spreads (Barclay, Christie, Harris, Kandel, and Schultz (1999), Weston (2000), and Fink, Fink, and Weston (2006)). Trades on ECNs seem to be more informative and contribute to price discovery (Huang (2002) and Barclay, Hendershott, and McCormick (2003)).…”

The determinants of alternative trading venue market share: Global evidence from the introduction of Chi-X

“…Fink, Fink, and Weston (2006) study the growth of electronic communication networks (ECNs) in the U.S. equity market. They document that lower effective and relative bid-ask spreads, greater depths, and less concentrated markets are associated with the development of alternative trading platforms.…”

An Empirical Analysis of New Rules Adopted Under Regulation National Market System: Pilot Phase Period Implementation Results

“…As a result, trading costs may decline and thereby improve market quality. Previous work suggests that competition improves market quality when electronic markets are able to compete (Weston (2002), Fink, Fink & Weston (2006)). For NYSE listings, the specialist had a competitive advantage preventing the electronic markets from directly competing for trades.…”