Why Do NASDAQ Market Makers Avoid Odd-Eighth Quotes?

@article{Christie1994WhyDN,
  title={Why Do NASDAQ Market Makers Avoid Odd-Eighth Quotes?},
  author={W. Christie and P. Schultz},
  journal={Journal of Finance},
  year={1994},
  volume={49},
  pages={1813-1840}
}
  • W. Christie, P. Schultz
  • Published 1994
  • Business
  • Journal of Finance
  • The NASDAQ multiple dealer market is designed to produce narrow bid-ask spreads through the competition for order flow among individual dealers. However, the authors find that odd-eighth quotes are virtually nonexistent for 70 of 100 actively traded NASDAQ securities, including Apple Computer and Lotus Development. The lack of odd-eighth quotes cannot be explained by the negotiation hypothesis of L. Harris (1991), trading activity, or other variables thought to impact spreads. This result… CONTINUE READING
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