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Dispersed Trading and the Prevention of Market Failure: the Case of the Copenhagen Stock Exchange
Author(s) -
Porter David C.,
Tanggaard Carsten,
Weaver Daniel G.,
Yu Wei
Publication year - 2008
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1468-036x.2007.00413.x
Subject(s) - blackout , terrorism , stock exchange , business , stock market , economics , financial economics , power (physics) , finance , electric power system , political science , paleontology , physics , horse , quantum mechanics , law , biology
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.