Title: How Much Information Is Enough: Securities Market Information and the Quest for a More Efficient Market
Abstract: While the system for collecting, consolidating, and disseminating securities market information has worked relatively well over the past two decades, advances in technology, changing market structures and market participants' desires to reduce transaction costs have led some in the industry to call for fundamental changes to the way in which market information is priced and disseminated. Many critics of the current system note that the best price displayed to the public is not always the best price available. Indeed, often the best price in the market is just a benchmark for determining what the real best price is. There is a growing debate in the securities markets today over whether the current market information system should be reformed. One of the key questions in the debate is whether the SEC should revisit a 25-year old rule that requires a certain fixed amount of price information to be made available to the public. This article seeks to determine which of the many potential approaches to updating this rule would be most likely to enhance the efficiency of the securities markets. It concludes that the SEC should require an enhanced amount of information to be disseminated to the public based on a formula that takes into consideration the volatility of individual stocks.
Publication Year: 2004
Publication Date: 2004-04-22
Language: en
Type: article
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