market architecture of selected stock exchanges in ... - Gilles Daniel

263.2 Opening Hours and Trading DaysIn the respective section analyzing the selected stock exchanges (Chapter 4), theopening or trading hours and trading days will be presented.3.3 Types of Market StructureMarkets make the exchange of securities among investors possible. According toGarbade (1982), markets, in which securities are traded may be categorizedcorresponding to how investors have to seek out compatible trading partners. Thereare five types of market structure: Direct search markets• Brokered markets• Dealer markets• Auction markets• Hybrid markets.Moving from direct search markets to brokered markets, dealer markets and auctionmarkets fixed costs for regulations and physical trading facilities increase, the costsper trade decrease, and the structural prerequisites increase.3.3.1 Direct Search MarketsSecurities traded in direct search markets are usually bought and sold so infrequentlythat no broker or dealer has an incentive to provide any kind of service to facilitatetrading. Hence, buyers and sellers must search a trading partner among all possiblepartners for the best possible price. This implies the probability that at the same timea trade has been agreed upon, a better price could have been possible with anotherpartner. Furthermore and due to the same circumstance, trades can occur at the sametime for the same securities at different prices (Garbade 1982).