New Stock Market: Law, Economics, and Policy

The U.S. stock market has undergone a significant transformation over the last twenty-five years, becoming an electronic market dominated by algorithmic trading and high-frequency traders. The book "The New Stock Market" provides a comprehensive analysis of how these markets work, how they fail, and how they should be regulated. It highlights the role of information asymmetries and adverse selection in explaining market behavior and examines a wide range of developments in market practices and participants. The book covers issues such as high-frequency trader practices, insider trading, manipulation, short selling, broker-dealer practices, and trading venue fees and rebates and offers an assessment of the existing regulatory structure and how it can be improved.

Format: Hardback
Length: 408 pages
Publication date: 08 January 2019
Publisher: Columbia University Press

The stock market in the United States has undergone a remarkable transformation over the past twenty-five years. Once a market where human traders operated at leisurely speeds, it has now evolved into an electronic arena dominated by algorithmic trading, executed at speeds approaching the speed of light. High-frequency traders play a significant role in a substantial portion of all transactions, and a notable minority of trade takes place on alternative trading systems known as "dark pools." While these developments have sparked widespread criticism, there remains no consensus on the most appropriate regulatory response to these significant changes.

The New Stock Market provides a comprehensive and insightful exploration of these markets, their mechanisms, and the need for effective regulation. Authored by Merritt B. Fox, Lawrence R. Glosten, and Gabriel V. Rauterberg, the book delves into the institutions and regulatory framework of stock markets, drawing upon the principles of microstructure economics to shed light on the role of information asymmetries and adverse selection in shaping market behavior. Through a detailed examination of various developments in market practices and participants, the authors offer a compelling account of the stock market's regulatory framework, fundamental institutions, and economic dynamics.

The book addresses a wide range of issues pertinent to the stock market, including the practices of high-frequency traders, insider trading, manipulation, short selling, broker-dealer practices, and trading venue fees and rebates. By illuminating these practices, the book sheds light on both the existing regulatory structure of our equity trading markets and potential avenues for improvement.

In conclusion, The New Stock Market is a valuable resource for anyone interested in understanding the complex dynamics of the stock market and the challenges posed by recent developments. By providing a comprehensive analysis of these markets, their institutions, and regulatory framework, the book offers valuable insights into how we can enhance the efficiency, transparency, and fairness of our equity trading systems.

Weight: 736g
Dimension: 165 x 243 x 32 (mm)
ISBN-13: 9780231181969