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Market fragmentation - Coggle Diagram
Market fragmentation
PROS
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Prevents investors from taking full advantage of the "thick market externalities" - each additional market participant reuduces the trading fees or increases the liquidity of all other traders
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CONS
Hurts the Broker-Client Relationship because of the proliferation of "dark pools" and difficulties in locating good prices
Brokers' interests may conflict with their clients because they sometimes receive monetary inducement from specific liquidity suppliers
It is hard for clients to verify whether their agents used the best strategy to execute their orders
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