Dealer Networks
Details
Serval ID
serval:BIB_530949867C7C
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Dealer Networks
Journal
The Journal of Finance
Publication state
Published
Issued date
02/2019
Peer-reviewed
Oui
Volume
74
Number
1
Pages
91-144
Language
english
Abstract
Dealers in the over‐the‐counter municipal bond market form trading networks with other dealers to mitigate search frictions. Regulatory data show that this network has a core‐periphery structure with 10 to 30 hubs and over 2,000 peripheral broker‐dealers in which bonds flow from periphery to core and partially back. Central dealers charge investors up to double the round‐trip markups compared to peripheral dealers. In turn, central dealers provide immediacy by matching buyers with sellers more directly and prearranging fewer trades, especially during stress times. Investors thus face a trade‐off between execution cost and speed, consistent with network models of decentralized trade.
Create date
20/11/2012 16:03
Last modification date
30/05/2020 5:18