Decimalization and competition among stock markets: Evidence from the Toronto Stock Exchange cross-listed securities

Hee Joon Ahn, Charles Q. Cao, Hyuk Choe

Research output: Contribution to journalArticle

60 Scopus citations

Abstract

We study the impact of Toronto Stock Exchange (TSE) decimalization on the competition for order flow. For TSE stocks cross-listed on the NYSE/AMEX, spreads decrease by 27% on the TSE and do not change on the NYSE/AMEX. For TSE stocks cross-listed on Nasdaq, spreads decline by 16% and 8% on the TSE and Nasdaq, respectively. However, order flow does not migrate from U.S. markets to the TSE. Our results indicate that the savings in TSE transaction costs do not offset the benefits of trading on the NYSE/AMEX, and that Nasdaq dealers might not operate as efficiently as perfect competition warrants.

Original languageEnglish (US)
Pages (from-to)51-87
Number of pages37
JournalJournal of Financial Markets
Volume1
Issue number1
DOIs
StatePublished - Apr 30 1998

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Decimalization and competition among stock markets: Evidence from the Toronto Stock Exchange cross-listed securities'. Together they form a unique fingerprint.

  • Cite this