Insider Trading, Informed Trading, and Market Making: Liquidity of Securities Markets in the Zero-Sum Game
William & Mary Business Law Review, Vol. 3, No. 1, pp. 1-57, 2012
57 Pages Posted: 7 Mar 2011 Last revised: 23 Mar 2012
Date Written: February 1, 2012
Abstract
This Article reexamines the nexus of relationships among informed transactions, information asymmetry, and liquidity of securities markets in the context of public policy debates about insider trading and its regulation. The Article analyzes this nexus, with the emphasis on recent empirical studies and developments in the securities industry, from a variety of perspectives and considers the validity of the alleged link between insider trading — as opposed to other forms of informed trading — and market liquidity as a justification for the existence of regulation.
Keywords: Insider Trading, Informed Trading, Market Makers, Market Liquidity, Regulation
JEL Classification: D82, G28, K22
Suggested Citation: Suggested Citation