Abstract
The permission of dual trading in stock markets is highly controversial in academic as well as the practitioners9 discussions, due to the thread of front-running/piggy-backing. This article contributes to that discussion by analyzing an equity market (namely Xetra in Germany) that has unique features with regard to anonymity. The risk of front-running appears to be relatively high at Xetra, considering that it is a fully anonymous market allowing orders with hidden volume to be placed in the open limit order book. Despite those favorable conditions, the authors do not find evidence of widespread, systematic front-running/piggy-backing activity. Dual traders do not abuse their knowledge of hidden orders by their customers. Dual traders9 personal accounts provide liquidity to the market, but contrasting previous findings, the authors are not able to support the notion that dual traders provide liquidity to their own customers. <b>TOPICS:</b>Statistical methods, exchanges/markets/clearinghouses
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
