Dispersed Trading and the Prevention of Market Failure: The Case of the Copenhagen Stock Exchange
With augmented demands on power grids resulting in longer and larger blackouts combined with heightened concerns of terrorist attacks, trading institutions and policy makers have widened their search for systems that avoid market failure during these disturbing events. We provide insight into this issue by examining trading behavior at the Copenhagen Stock Exchange during a major blackout. We find that although market quality declined, markets remained functional and some price discovery occurred during the blackout period suggesting that the NOREX structure of interlinked trading systems combined with widely dispersed trading locations may be a viable means of protection against market failure during massive power disruptions or terrorist attacks.
|Date of creation:||04 Jan 2006|
|Date of revision:|
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- Joanne Hamet, 2002. "Is Off-Board Trading Detrimental to Market Liquidity?," The Financial Review, Eastern Finance Association, vol. 37(3), pages 385-402, 08.
- William G. Christie & Shane A. Corwin & Jeffrey H. Harris, 2002. "Nasdaq Trading Halts: The Impact of Market Mechanisms on Prices, Trading Activity, and Execution Costs," Journal of Finance, American Finance Association, vol. 57(3), pages 1443-1478, 06.
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