Skip Navigation

This Article
Right arrow Full Text (PDF)
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Similar articles in ISI Web of Science
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrow Search for citing articles in:
ISI Web of Science (77)
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Chowhdry, B.
Right arrow Articles by Nanda, V.
Right arrow Search for Related Content
Related Collections
Right arrow G14 - Information and Market Efficiency; Event Studies
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

Rev Fin 1991; 4:483-511
© 1991 the Society for Financial Studies

Article

Multimarket trading and market liquidity

B Chowhdry1 and V Nanda2
1 Anderson Graduate School of Management, University of California at Los Angeles, Los Angeles, CA 90024-1481, USA
2 University of Southern California, Southern California, USA

Abstract

When a security trades at multiple locations simultaneously, an informed trader has several avenues in which to exploit his private information. The greater the proportion of liquidity trading by 'large' traders who can split their trades across markets, the larger is the correlation between volume in different markets and the smaller is the informativeness of prices. We show that one of the markets emerges as the dominant location for trading in that security. When informed traders can use their information for more than one trading period, the timely release of price information by market informed traders expect to make subsequently at other locations. Markets makers, competing to offer the lowest cost of trading at their location, consequently deter informal trading by voluntarily making the price information public and by 'cracking down' on insider trading.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?


This article has been cited by other articles:


Home page
 REV FINANC STUDHome page
S. Baruch and G. Saar
Asset Returns and the Listing Choice of Firms
Rev. Financ. Stud., June 1, 2009; 22(6): 2239 - 2274.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
S. Sarkissian and M. J. Schill
Are there permanent valuation gains to overseas listing?
Rev. Financ. Stud., January 1, 2009; 22(1): 371 - 412.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
M. Halling, M. Pagano, O. Randl, and J. Zechner
Where Is the Market? Evidence from Cross-Listings in the United States
Rev. Financ. Stud., April 1, 2008; 21(2): 725 - 761.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
P. Pasquariello and C. Vega
Informed and Strategic Order Flow in the Bond Markets
Rev. Financ. Stud., November 1, 2007; 20(6): 1975 - 2019.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
V. R. Eleswarapu and K. Venkataraman
The Impact of Legal and Political Institutions on Equity Trading Costs: A Cross-Country Analysis
Rev. Financ. Stud., September 1, 2006; 19(3): 1081 - 1111.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
T. Hendershott and C. M. Jones
Island Goes Dark: Transparency, Fragmentation, and Regulation
Rev. Financ. Stud., September 1, 2005; 18(3): 743 - 793.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
S. Sarkissian and M. J. Schill
The Overseas Listing Decision: New Evidence of Proximity Preference
Rev. Financ. Stud., July 1, 2004; 17(3): 769 - 809.
[Abstract] [Full Text] [PDF]


Disclaimer: Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.