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Off-Board Trading of NYSE-Listed Stocks: The Effects of Degregulation and the National Market System

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  • Hamilton, James L

Abstract

An econometric time-series model of off-board trading of NYSE-listed stocks shows that high NYSE commis sion rates were an incentive for third-market trading, but that tradi ng on the regional exchanges, which is most of off-board trading, has been affected very little by commissions or their deregulation. The effects of some changes in the trading organization and rules are est imated, including several that are part of the emerging National Mark et System (NMS). The estimates imply that the NMS has increased compe tition for the NYSE, as Congress intended, and has prompted the NYSE to improve its performance to retain market share. Copyright 1987 by American Finance Association.

Suggested Citation

  • Hamilton, James L, 1987. "Off-Board Trading of NYSE-Listed Stocks: The Effects of Degregulation and the National Market System," Journal of Finance, American Finance Association, vol. 42(5), pages 1331-1345, December.
    • Handle: RePEc:bla:jfinan:v:42:y:1987:i:5:p:1331-45
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    Cited by:

    1. Griffiths, Mark D. & Smith, Brian F. & Turnbull, D. Alasdair S. & White, Robert W., 1998. "The Role of Tick Size in Upstairs Trading and Downstairs Trading," Journal of Financial Intermediation, Elsevier, vol. 7(4), pages 393-417, October.
    2. Walayet A. Khan & H. Kent Baker, 1993. "Unlisted Trading Privileges, Liquidity, And Stock Returns," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 16(3), pages 221-236, September.
    3. William O. Brown, Jr. & J. Harold Mulherin & Marc D. Weidenmier, 2006. "Competing With the NYSE," NBER Working Papers 12343, National Bureau of Economic Research, Inc.
    4. Blennerhassett, Michael & Bowman, Robert G., 1998. "A change in market microstructure: the switch to electronic screen trading on the New Zealand stock exchange," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 8(3-4), pages 261-276, December.
    5. Thomas H McInish & Bonnie F Van Ness & Robert A Van Ness, 2002. "After‐hours trading of NYSE stocks on the regional stock exchanges," Review of Financial Economics, John Wiley & Sons, vol. 11(4), pages 287-297.
    6. James L. Hamilton, 1995. "Anatomy Of Satellite Trading In The National Market System For Nyse-Listed Stocks," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 18(2), pages 189-206, June.

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