Dispersed trading and the prevention of market failure: The case of the Copenhagen Stock Exchange

David C. Porter, Carsten Tanggaard, Daniel G. Weaver, Wei Yu

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

With augmented demands on power grids resulting in longer and larger blackouts combined with heightened concerns of terrorist attacks, trading institutions and policy makers have widened their search for systems that avoid market failure during these disturbing events. We provide insight into this issue by examining trading behaviour at the Copenhagen Stock Exchange during a major blackout. We find that although market quality declined, markets remained functional and some price discovery occurred during the blackout period suggesting that the NOREX structure of interlinked trading systems combined with widely dispersed trading locations may be a viable means of protection against market failure during massive power disruptions or terrorist attacks.

Original languageEnglish (US)
Pages (from-to)243-267
Number of pages25
JournalEuropean Financial Management
Volume14
Issue number2
DOIs
StatePublished - Mar 2008

All Science Journal Classification (ASJC) codes

  • Accounting
  • Economics, Econometrics and Finance(all)

Keywords

  • Fragmented markets
  • Market failure
  • Power failure

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