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Dealers as Record Keepers

Author

Listed:
  • John Chi-Fong Kuong

    (CUHK - The Chinese University of Hong Kong)

  • Vincent Maurin

    (HEC Paris - Ecole des Hautes Etudes Commerciales)

Abstract

Trading relationships in over-the-counter (OTC) markets are persistent and often exclusive, despite technological advances that have expanded clients' access to dealers. We rationalize this pattern in a model where trading relationships allow dealers to learn their clients' trading motives from their trading records. Relationship dealers set record-contingent quotes, generating price discrimination that mitigates adverse selection for liquidity-driven clients. Moreover, we show that clients prefer exclusive relationships to keep their record private. As a result, post-trade transparency and trading protocols that facilitate public inference of clients' trading records by dealers (e.g., Request for Quote relative to Request for Market) may reduce gains from trade.

Suggested Citation

  • John Chi-Fong Kuong & Vincent Maurin, 2026. "Dealers as Record Keepers," Working Papers hal-05611119, HAL.
    • Handle: RePEc:hal:wpaper:hal-05611119
    DOI: 10.2139/ssrn.6165406
    as

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