In the best possible marketplace all buyers see the prices asked by all sellers and all sellers see the prices offered by all buyers -- and little guys are treated the same as big ones. The result: competition that insures the most efficient interplay of supply and demand. In theory it sounds great. And indeed this is the idea behind the Security and Exchange Commission’s push for an integrated stock market called the National Market System or NMS. But could the best intentions backfire? Wharton finance professor Marshall E. Blume answers that question in a new research paper titled ”Competition and Fragmentation in the Equity Markets: The Effect of Regulation NMS.”
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