Centralizing over-the-counter markets? by Milena Wittwer

Join us for the another event in the Microeconomics Research Seminar Series, Autumn Term 2021.

Dr Milena Wittwer from the Carroll School of Management of Boston College, will present their research on Centralizing over-the-counter markets?  

Abstract 

In traditional over-the-counter (OTC) markets, investors trade bilaterally through intermediaries referred to as dealers. An important regulatory question is whether to centralize OTC markets by shifting trades onto centralized platforms. We address this question in the context of the liquid Canadian government bond market. We document that  dealers charge markups even in this market and show that there is a price gap between large investors who have access to a centralized platform and small investors who do not. We specify a model to quantify how much of this price gap is due to platform access and assess welfare effects. The model predicts that not all investors would use the platform even if platform access were universal. Nevertheless, the price gap would close by 32%-47%. Welfare would increase by 9%-30% because more trades are conducted by dealers who have high values to trade.

This seminar will be held at 3pm at the Colchester Campus in Ivor Crewe Lecture Hall Seminar Room, as well as on Zoom. This event is open to all levels of study and is also open to the public. To register your place and gain access to the webinar, please contact the seminar organisers.

This event is part of the Microeconomics Research Seminar Series.