FRIC/Finance Seminar with Katya Malinova, University of Toronto

FRIC Center for Financial Frictions and the Department of Finance are proud to announce the upcoming seminar with Katya Malinova, University of Toronto.

Title: The impact of maker-taker fees

The talk will primarily be based on the paper:

Subsidizing Liquidity: The Impact of Make/Take Fees on Market Quality

Authors:

Katya Malinova, University of Toronto
Andreas Park, University of Toronto

Abstract:
Facing increased competition, over the last decade many stock exchanges changed their trading fees to maker-taker pricing, an incentive scheme that rewards liquidity suppliers and charges liquidity demanders. Using a change in trading fees on the Toronto Stock Exchange, we study whether and why the breakdown of trading fees between liquidity demanders and suppliers matters. Posted quotes adjust after the change in the fee composition, but the transaction costs for liquidity demanders remain unaffected once fees are taken into account. Yet, as posted bid-ask spreads decline, traders, in particular retail, use aggressive orders more frequently, and adverse selection costs decrease.