Overview of Over the Counter Capital Market Facilities

Details

Supervisors

Henrard, Luc

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

This paper can serve as a base for those studying the market structure of off-exchange capital market facilities. I introduce alternative discretionary and non-discretionary trading methods that take place outside of the world of traditional stock exchanges. I discuss the issues at stake for the investor and show is the market structure reacting to a changing investor landscape. All along, I try to provide information that might be put to use by parties participating in the segment as well as scholars looking to better understand the inner workings of discretionary and non-discretionary off-exchange trading methods & platforms. Thereafter, I study US & EU private exchanges to explain the growing popularity of this trading segment. I raise the issues that regulations have and have not yet solved. Further, I try to inform of trends and risks arising inherent to the segment that may deteriorate the participant’s order execution quality. I explain the value of trading through private pools and the implications for various types of investor’s order routing strategies. Finally, aggregating scholarly research in the field, I try to give an idea on how off-exchange venues affect global financial stability in terms of price discovery and market quality.