Participants in an experimental market choose to enter private value trades manually and/or algorithmically. Each algorithm or trading robot makes or takes liquidity based on the trader’s current marginal valuation modulo a spread chosen by the trader. We evaluate experimental outcomes against both competitive equilibrium and equilibrium of the strategic game if all participants choose…
Valued at around $10 trillion, the U.S. corporate bond market is slow, expensive, and inefficient. This Article argues that the bond market – premised on contract – rests on a flawed regulatory design that delivers neither investor protection nor market quality.
While algorithmic trading now dominates financial markets, some exchanges continue to use human floor traders. On March 23, 2020 the NYSE suspended floor trading because of COVID-19. Using a difference-in-differences analysis around the closure of the floor, we find that floor traders are important contributors to market quality.
We use the Federal Reserve’s Secondary Market Corporate Credit Facility (SMCCF) to examine whether secondary market liquidity has real economic effects.