Trading Your Neighbor's Etfs: Competition or Fragmentation?

By B. Boehmer, Ekkehart Boehmer. 2001

176 citations recorded by the source corpus.

On July 31, 2001, for the first time in its history, the New York Stock Exchange began trading three unlisted securities. The DIA, SPY, and QQQ are the most actively traded Exchange Traded Funds (ETFs) and are listed on the American Stock Exchange. On April 15, 2002 another 27 ETFs followed. These two events provide a unique experiment for studying the impact of a new entrant on market quality. In contrast to recently revived concerns about the adverse impact of market fragmentation, we document that the NYSE entry leads to a dramatic improvement in liquidity that we attribute to the elimination of market-maker rents.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/68fc938ded49cd63dafbb9aa339920b93e68af0e

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Citations in the corpus

Island Goes Dark: Transparency, Fragmentation, and Regulation (2005, background): “Boehmer and Boehmer (2003) report a Nasdaq market share of 20–40% after NYSE entry whereas by our 2002 time period Island and Instinet-3rd market represent about 60% of volume in all three ETFs.”
High‐Frequency Trading and Market Performance (2020, unknown): “…of informationally-motivated trade.14 This 13That adding a trading venue deepens the aggregate book is corroborated by empirical evidence (e.g., Boehmer and Boehmer (2003), Fink, Fink, and Weston (2006), Foucault and Menkveld (2008), He, Jarnecic, and Liu (2015), Aitken, Chen, and Foley…”