Discussion

Article Abstract:

A response to Kumar Venkataraman's 'Automated versus floor trading: an analysis of execution costs on the Paris and New York exchanges' is presented. Research results indicate that human intermediation on trading floors such as that of the NYSE has distinct advantages over automated trading systems such as that of Paris.

United States, Securities and Commodity Exchanges, Securities Exchanges, Economics, Research and Development in the Social Sciences and Humanities, New York Stock Exchange, Statistical Data Included, Statistics, Investments, Securities industry, New York Stock Exchange Inc., Finance, Euronext Paris

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Trading mechanisms in securities markets

Article Abstract:

This paper analyzes price formation under two trading mechanisms: a continuous quote-driven system where dealers post prices before order submission and an order-driven system where traders submit orders before prices are determined. The order-driven system operates either as a continuous auction, with immediate order execution, or as a periodic auction, where orders are stored for simultaneous execution. With free entry into market making, the continuous systems are equivalent. While a periodic auction offers greater price efficiency and can function where continuous mechanisms fail, traders must sacrifice continuity and bear higher information costs. (Reprinted by permission of the publisher.)

Economic aspects, Stockbrokers, Trading rooms (Finance)

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