The Economics and Regulation of Secondary Trading Markets

We examine current areas of concern in the regulation of secondary trading markets, including questions concerning market fragmentation, protected orders, minimum tick size, maker-taker pricing models, transparency and dark liquidity, algorithmic and high-frequency trading, the duties and obligations of broker-dealers who handle customer orders, system robustness, flash crashes and episodic liquidity, exchange traded funds, distributed ledger technology, the ownership and usage of market data, and the governance of market data plans. We also discuss potential ways to reduce transaction costs and improve transparency in fixed income markets. To the extent possible, we summarize key findings from the existing academic literature, describe directions for future research, and offer suggestions for future rulemaking.