Forestalling floor closure: evidence from a natural experiment on the German stock market
This article contributes to the debate about the relative qualities of floor and electronic trading systems by analysing the effects of bringing forward the Xetra closing time from 8.00 pm to 5.30 pm in November 2003, while the Frankfurt floor remains open until 8.00 pm. This natural experiment provides a ‘cleaner’ institutional setting than in Venkataraman (2001), as it enables us to investigate trading quality on both platforms for the same stocks in the same country before and after the event. The empirical evidence suggests that primarily institutional investors trading in large stocks transfer to the floor when Xetra closes earlier. It appears that investors remain with Xetra for informed trading though.
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Volume (Year): 44 (2012)
Issue (Month): 6 (February)
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