TY  - UNPD
A1  - Sagade, Satchit
A1  - Scharnowski, Stefan
A1  - Westheide, Christian
T1  - Broker colocation and the execution costs of customer and proprietary orders
T2  - SAFE working paper ; No. 366
N2  - Colocation services offered by stock exchanges enable market participants to achieve execution costs for large orders that are substantially lower and less sensitive to transacting against high-frequency traders. However, these benefits manifest only for orders executed on the colocated brokers' own behalf, whereas customers' order execution costs are substantially higher. Analyses of individual order executions indicate that customer orders originating from colocated brokers are less actively monitored and achieve inferior execution quality. This suggests that brokers do not make effective use of their technology, possibly due to agency frictions or poor algorithm selection and parameter choice by customers.
T3  - SAFE working paper - 366 
KW  - Execution Cost
KW  - Institutional Investor
KW  - Broker
KW  - High-Frequency Trading
KW  - Colocation
Y1  - 2022
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/69108
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-691088
UR  - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4289346
N1  - The authors gratefully acknowledge financial support from the Research Center SAFE, funded by the State of Hessen research initiative LOEWE.
N1  - An earlier version of this paper appeared as chapter 2 of Stefan Scharnowski’s doctoral dissertation at the University of Mannheim.
PB  - SAFE
CY  - Frankfurt am Main
ER  -