Inventory‐based stock market transparency rules
Journal of Financial Regulation and Compliance
ISSN: 1358-1988
Article publication date: 1 January 1997
Abstract
The London Stock Exchange is currently preparing for the largest changes in its trading practices since the Big Bang. It is already known that the Exchange is proposing to retain its practice of delaying the publication of large trades so as to encourage the execution of such trades, even though this delayed publication also creates an undesirable information imbalance. However, in reality, what matters to market makers is the effect of a large trade on their inventory position, not the size of the trade itself. It is shown that delaying trade publication on the basis of size and inventory delays the publication of far fewer trades than does the current regime, while still offering protection to market participants who provide liquidity by unbalancing their inventory to accommodate large trades.
Citation
Board, J. and Sutcliffe, C. (1997), "Inventory‐based stock market transparency rules", Journal of Financial Regulation and Compliance, Vol. 5 No. 1, pp. 23-28. https://doi.org/10.1108/eb024901
Publisher
:MCB UP Ltd
Copyright © 1997, MCB UP Limited