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On the Integration of the US Equity Markets (Revised: 18-95)

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  • Marshall E. Blume
  • Michael A. Goldstein

Abstract

In response to the 1975 Congressional call for a national market system to provide a transparent link across individual markets that trade NYSE-listed stocks, the SEC caused the implementation of three electronic systems that provide a partial integration of these markets. This partial integration together with the trading process on the NYSE floor has created market niches in which non-NYSE markets can prosper. Empirically, the bid and asked prices of the NYSE quote are the primary determinant of the best displayed prices. Non-NYSE markets attract a significant portion of their volume for reasons other than matching or bettering the NYSE quote, such as "payment for order flow." This fragmentation of trading is a logical outgrowth of the SEC-imposed partial integration and the trading process on the NYSE floor.

Suggested Citation

  • Marshall E. Blume & Michael A. Goldstein, "undated". "On the Integration of the US Equity Markets (Revised: 18-95)," Rodney L. White Center for Financial Research Working Papers 01-95, Wharton School Rodney L. White Center for Financial Research.
    • Handle: RePEc:fth:pennfi:01-95
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    Cited by:

    1. Naser Ibrahim Abumustafa, . "Potential Integration of Middle Eastern Countries' Stock Markets," Fordham Economics Dissertations, Fordham University, Department of Economics, number 2002.1.

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