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Market Fragmentation - Coggle Diagram
Market Fragmentation
Cons
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Can reduce liquidity
Asymmetric information makes increased profit of informed traders come at the expense of liquidity traders
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Weakened interactions between market makers in different liquidity pools can decrease their incentives to offer good quotes
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Agency problem
Fragmented market, dark pools and hidden orders make it harder for investors to locate good prices. Brokers are not able to entirely charge the costs of searching for and implementing the best execution strategy for their clients
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