Considering the discussion at the roundtable, the delegate submissions, and the background paper, a number of key points emerge. (1) As a general rule, increased price transparency will benefit buyers unless it results in considerably increased risks of collusion among sellers. One way to describe price transparency is to refer to the costs in time and money required to discover actual transact...

This paper describes the over-the-counter derivatives markets from the point of view of its structure, participants and products. We highlight the current trading venues for OTC equity derivatives, which include the inter-dealer market as well as electronic trading networks. The paper shows that the link between listed stock exchanges, options exchanges and the OTC market provides significant p...

I model strategic interaction between issuers, underwriters, retail investors, and institutional investors when the secondary market has limited price transparency. Search costs for retail investors lead to price dispersion in the secondary market, while the price for institutional investors is infinitely elastic. Because retail distribution capacity is assumed to be limited for each underwrite...

As a policymaker, the central bank both observes and shapes the economy. The central bank scrutinizes market activity to assess the state of the economy, and its policy strongly shapes market outcomes. When transparency allows the central bank to shape the economy more effectively, it may also cause the informational role of the economic aggregate to deteriorate. This paper presents a simple mo...

We characterize the price-transparency role of benchmarks in over-the-counter markets. A benchmark can, under conditions, raise total social surplus by increasing the volume of beneficial trade, facilitating more efficient trade matching between dealers and customers, and reducing total search costs. Although the improvement in market transparency caused by benchmarks lowers dealer profit margi...

We study how seller exit and continuing sellers’ behavior on eBay are affected by an improvement in market transparency. The improvement was achieved by reducing strategic bias in buyer ratings. It led to a significant increase in buyer satisfaction with seller performance, but not to an increase in seller exit. When sellers had the choice between exiting—a reduction in adverse selection—and im...