14. Market Makers and Liquidity

  1. H. Kent Baker and
  2. Halil Kiymaz
  1. Frank J. Sensebrenner

Published Online: 23 AUG 2013

DOI: 10.1002/9781118681145.ch14

Market Microstructure in Emerging and Developed Markets: Price Discovery, Information Flows, and Transaction Costs

Market Microstructure in Emerging and Developed Markets: Price Discovery, Information Flows, and Transaction Costs

How to Cite

Sensebrenner, F. J. (2013) Market Makers and Liquidity, in Market Microstructure in Emerging and Developed Markets: Price Discovery, Information Flows, and Transaction Costs (eds H. K. Baker and H. Kiymaz), John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118681145.ch14

Author Information

  1. Visiting Fellow, Johns Hopkins SAIS, Center for Transatlantic Relations

Publication History

  1. Published Online: 23 AUG 2013
  2. Published Print: 16 AUG 2013

ISBN Information

Print ISBN: 9781118278444

Online ISBN: 9781118681145

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Keywords:

  • liquidity;
  • transactions costs;
  • market structures;
  • high-frequency trading;
  • specialists;
  • market makers;
  • electronic trading

Summary

Current trading is characterized by various market structures. This chapter examines market structures predominant in equities and fixed-income markets and compares and contrasts them. It also reviews the academic literature about the implications of market structure design. Market structure influences the availability and price of securities and can influence market participants' choice of trading in many aspects—the venue on which participants trade, how they parcel the order to achieve their objectives, and the composition of what fees they pay. Additionally, the chapter shows how regulation and technology, as well as trader preferences, have influenced the development of securities markets.