A critical review to analyse the effect of online and traditional trading on effective market performance on the Nasdaq

  • Authors:

  • Haroun Alryalat;Yogesh Kumar Dwivedi;Jasna Kuljis;Ray J. Paul

  • Affiliations:

  • School of Information Systems Computing and Mathematics, Brunel University, Uxbridge UB8 3PH, UK.;School of Information Systems Computing and Mathematics, Brunel University, Uxbridge UB8 3PH, UK.;School of Information Systems Computing and Mathematics, Brunel University, Uxbridge UB8 3PH, UK.;School of Information Systems Computing and Mathematics, Brunel University, Uxbridge UB8 3PH, UK

  • Venue:
  • International Journal of Electronic Finance
  • Year:
  • 2006

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Abstract

The purpose of this paper is to present a critical analysis on the competition between online (ECN) and traditional (Market Maker (MM)) trading on the Nasdaq stock exchange. Online stock trading mechanisms at the exchanges are often a hybrid of dealer and auction markets. Different aspects of trading execution, which is the most commonly used market centre at present, are analysed. This leads to a discussion on: (1) the bath that executes order is organised and (2) its impact on the effective market performance, trading cost and investor behaviour.