TY  - UNPD
A1  - Bellia, Mario
A1  - Pelizzon, Loriana
A1  - Subrahmanyam, Marti G.
A1  - Uno, Jun
A1  - Yuferova, Darya
T1  - Paying for market liquidity : competition and incentives
T2  - SAFE working paper series ; No. 247
N2  - Do competition and incentives offered to designated market makers (DMMs) improve market liquidity? Using data from NYSE Euronext Paris, we show that an exogenous increase in competition among DMMs leads to a significant decrease in quoted and effective spreads, mainly through a reduction in adverse selection costs. In contrast, changes in incentives, through small changes in rebates and requirements for DMMs, do not have any tangible effect on market liquidity. Our results are of relevance for designing optimal contracts between exchanges and DMMs and for regulatory market oversight.
T3  - SAFE working paper - 247 
KW  - High-Frequency Trading (HFT)
KW  - Designated Market Makers (DMMs) Market Making
KW  - Adverse Selection
KW  - Liquidity Provision
Y1  - 2019
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/49242
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-492420
UR  - https://ssrn.com/abstract=3354400
IS  - February 2019
PB  - SAFE
CY  - Frankfurt am Main
ER  -