Policy Watch: Did Nasdaq Market Makers Implicitly Collude?
AbstractThis paper chronicles the research that led to the conclusion that Nasdaq marketmakers implicitly colluded to maintain supracompetitive spreads (Christie and Schultz, 1994). The paper provides a brief description of the differences between a dealer and an auction market, and highlights the result that NASDAQ marketmakers quoted a majority of large issues exclusively in even-eighths. The paper then provides a personalized description of the events that soon followed, including the publicity surrounding the article, the ensuing antitrust investigation by the Department of Justice, and the abandonment of these agreements once the practice was disclosed.
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Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Perspectives.
Volume (Year): 9 (1995)
Issue (Month): 3 (Summer)
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- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
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- Benston, George J. & Wood, Robert A., 2008. "Why effective spreads on NASDAQ were higher than on the New York stock exchange in the 1990s," Journal of Empirical Finance, Elsevier, vol. 15(1), pages 17-40, January.
- Jay R. Ritter, 2008. "Forensic Finance," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 127-47, Summer.
- Asker, John, 2010. "Leniency and post-cartel market conduct: Preliminary evidence from parcel tanker shipping," International Journal of Industrial Organization, Elsevier, vol. 28(4), pages 407-414, July.
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