Publication Type
Journal Article
Version
acceptedVersion
Publication Date
9-2003
Abstract
On July 31, 2001, for the first time in its history, the New York Stock Exchange (NYSE) began trading three unlisted securities. The DIA, SPY, and QQQ are the most actively traded Exchange Traded Funds (ETFs) and are listed on the American Stock Exchange. On April 15, 2002 another 27 ETFs followed. These two events provide a unique experiment for studying the impact of a new entrant on market quality. In contrast to recently revived concerns about the adverse impact of market fragmentation, we document that the NYSE entry leads to a dramatic improvement in liquidity that we attribute to the elimination of market-maker rents.
Keywords
Securities trading, Market liquidity, Trading cost, ETF, Exchange competition
Discipline
Finance and Financial Management | Portfolio and Security Analysis
Research Areas
Finance
Publication
Journal of Banking and Finance
Volume
27
Issue
9
First Page
1667
Last Page
1703
ISSN
0378-4266
Identifier
10.1016/S0378-4266(03)00095-5
Publisher
Elsevier
Citation
BOEHMER, Beatrice and BOEHMER, Ekkehart.
Trading your neighbor's ETFs: Competition or fragmentation?. (2003). Journal of Banking and Finance. 27, (9), 1667-1703.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4655
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/S0378-4266(03)00095-5
Comments
Special issue on The Future of Stock Exchanges in a Globalizing World.