Centralizing Over-the-Counter Markets
Bibliographic Data
| ID | 10181038 |
|---|---|
| Authors | Jason Allen (0000-0003-2558-9061, Bank of Canada), Milena Wittwer (0009-0007-3266-111X, Boston College) |
| Year | 2023 |
| Volume | 131 |
| Issue | 12 |
| Pages | 3310-3351 |
| Publication date | 2023-04-24 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/725361 |
| OpenAlex | W3136675605 |
| Language | EN |
| Citations received | 3 |
| References cited | 36 |
In traditional over-the-counter markets, investors trade bilaterally through intermediaries. We assess whether and how to shift trades on a centralized platform with trade-level data on the Canadian government bond market. We document that intermediaries charge a markup when trading with investors and specify a model to quantify price and welfare effects from market centralization. We find that many investors would not use the platform, even if they could, because it is costly, competition for investors is low, and investors value relationships with intermediaries. Market centralization can even decrease welfare, unless competition is sufficiently strong
Business · Competition (biology · Economics · Financial intermediary · Financial system · Government (linguistics · Intermediary · International economics · Market economy · Monetary economics · Value (mathematics · Welfare · Banking stability, regulation, efficiency · Economic theories and models · Finance · Financial Markets and Investment Strategies
| Unique citing works | 3 |
|---|---|
| Citations per year | 1 |
| Citation span | 2023 - 2025 (3) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 3 |