NOTRE DAME FACULTY Question Conventional Wisdom
In a traditional market, such as Nasdaq, buy and sell orders pass through the hands of various middlemen. Not so with Electronic Communication Networks (ECNs), which bypass human interme- diaries altogether, says Roger Huang, Meyer Chair in Global Investment Management at the University of Notre Dame's Mendoza College of Business. Huang—who analyzed more than 14.8 million bid and ask quotes offered through ECNs and the Nasdaq over a two-year period—found that ECNs already control up to one-third of the total share of volume traded on the Nasdaq because ECN's offer tighter "spreads."
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