Order Routing Decisions for a Fragmented Market: A Review

This paper reviews the up-to-date theoretical, empirical, and experimental literature related to the trading venue choice in the context of the fragmented equity markets. We provide a brief background on the history of trading fragmentation in the equity market and its determinants. We discuss the d...

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Auteurs principaux:	Suchismita Mishra, Le Zhao
Format:	article
Langue:	EN
Publié:	MDPI AG 2021
Sujets:	market structure fragmentation market quality trading volume order routing decision Risk in industry. Risk management HD61 Finance HG1-9999
Accès en ligne:	https://doaj.org/article/b48bcbc90f6542a69835056cd7767b2a
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spelling	oai:doaj.org-article:b48bcbc90f6542a69835056cd7767b2a2021-11-25T18:08:46ZOrder Routing Decisions for a Fragmented Market: A Review10.3390/jrfm141105561911-80741911-8066https://doaj.org/article/b48bcbc90f6542a69835056cd7767b2a2021-11-01T00:00:00Zhttps://www.mdpi.com/1911-8074/14/11/556https://doaj.org/toc/1911-8066https://doaj.org/toc/1911-8074This paper reviews the up-to-date theoretical, empirical, and experimental literature related to the trading venue choice in the context of the fragmented equity markets. We provide a brief background on the history of trading fragmentation in the equity market and its determinants. We discuss the direct and indirect impacts of the market fragmentation on market quality in various dimensions, including liquidity, volatility, and price efficiency. Next, we identify possible determinants and channels from theoretical and empirical studies that could explain order routing decisions and present the possible directions for future research. Finally, we discuss the major regulatory reforms in the U.S. equity market on routing venue decisions. This topic is relevant in current times when phenomena such as “GameStop Frenzy” have drawn significant attention to commission-free trading venues.Suchismita MishraLe ZhaoMDPI AGarticlemarket structurefragmentationmarket qualitytrading volumeorder routing decisionRisk in industry. Risk managementHD61FinanceHG1-9999ENJournal of Risk and Financial Management, Vol 14, Iss 556, p 556 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	market structure fragmentation market quality trading volume order routing decision Risk in industry. Risk management HD61 Finance HG1-9999
spellingShingle	market structure fragmentation market quality trading volume order routing decision Risk in industry. Risk management HD61 Finance HG1-9999 Suchismita Mishra Le Zhao Order Routing Decisions for a Fragmented Market: A Review
description	This paper reviews the up-to-date theoretical, empirical, and experimental literature related to the trading venue choice in the context of the fragmented equity markets. We provide a brief background on the history of trading fragmentation in the equity market and its determinants. We discuss the direct and indirect impacts of the market fragmentation on market quality in various dimensions, including liquidity, volatility, and price efficiency. Next, we identify possible determinants and channels from theoretical and empirical studies that could explain order routing decisions and present the possible directions for future research. Finally, we discuss the major regulatory reforms in the U.S. equity market on routing venue decisions. This topic is relevant in current times when phenomena such as “GameStop Frenzy” have drawn significant attention to commission-free trading venues.
format	article
author	Suchismita Mishra Le Zhao
author_facet	Suchismita Mishra Le Zhao
author_sort	Suchismita Mishra
title	Order Routing Decisions for a Fragmented Market: A Review
title_short	Order Routing Decisions for a Fragmented Market: A Review
title_full	Order Routing Decisions for a Fragmented Market: A Review
title_fullStr	Order Routing Decisions for a Fragmented Market: A Review
title_full_unstemmed	Order Routing Decisions for a Fragmented Market: A Review
title_sort	order routing decisions for a fragmented market: a review
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/b48bcbc90f6542a69835056cd7767b2a
work_keys_str_mv	AT suchismitamishra orderroutingdecisionsforafragmentedmarketareview AT lezhao orderroutingdecisionsforafragmentedmarketareview
_version_	1718411579610890240

Order Routing Decisions for a Fragmented Market: A Review

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