Stock Exchanges as Platforms for Data and Trading

The authors study stock exchange competition by analyzing linkages between proprietary data sales and trading activity.

In this paper published in the Journal of Financial Markets, authors Terrence Hendershott of University of California, Berkeley, Marc Rysman of Boston University, and Rainer Schwabe of Cornerstone Research study stock exchange competition by analyzing the introduction of a new data product, the New York Stock Exchange’s Integrated Feed (NYSE IF). The introduction of NYSE IF led to higher trading volumes on NYSE by both firms that subscribed to NYSE IF and firms that did not, which is consistent with the exchange’s data sales being linked to trading activity.

By studying these linkages, the authors deepen our understanding of how stock exchanges compete. Because trading and data services are inextricably linked, they must be analyzed jointly to understand the industry’s competitive dynamics.

This paper was published in the Journal of Financial Markets.