文档介绍：Trade Disclosure Regulation in Markets
with Negotiated Trades
Narayan Y. Naik
Anthony Neuberger
London Business School
S. Viswanathan
Duke University
In dealership markets disclosure of size and price details of public trades is typi-
cally plete. We examine whether full and prompt disclosure of public-trade
details improves the welfare of a risk-averse investor. We analyze a model of
dealership market where a market maker first executes a public trade and then
offsets her position by trading with other market makers. We distinguish between
quantity risk and price revision risk. We show that if the market maker learns some
information about the motive behind public trade, neither regime is unambigu-
ously welfare superior. This is because greater transparency improves quantity
risk sharing but worsens price revision risk sharing.
It is widely believed that greater transparency in the trading process is
desirable. In this view, increasing disclosure in trading is desirable because
it reduces adverse selection, encourages uninformed investors to participate
in the market, and facilitates risk sharing. The purpose of this article is to
examine circumstances in dealership environments in which requiring full
and prompt disclosure may reduce We model the market with
trading in two stages, mon feature in dealership markets. In the first
stage the public investor trades with a dealer. In the second stage the dealer
manages her position by trading in the interdealer market. In this setting, the
article asks whether full and prompt disclosure of first-stage trade details is
welfare improving. As in the standard analysis, the market is a mechanism
We thank two anonymous referees and David Hirshleifer for ments that have improved the
article. We thank Francis Breedon, Bhagwan Chowdry, Julian Franks, Larry Glosten, Judith Goff, Pete
Kyle, S. Nagarajan, Duane Seppi, Matt Spiegel, Alisa Roell, and seminar participan