THE MANAGEMENT OF MARKET MICROSTRUCTURE: APPLICATIONS OF OPERATIONS RESEARCH MODELS
Keywords:
Capital Markets, Market structure, Operations Research Models, MicrostructureAbstract
This paper is concern with the Management of Market structure: Application of Operation Research Models with respect to the Nigeria Capital Market. It looks at each Model from the inventory models through the information-based and game – theoretical paradigms. It looks at how models work, its strength and weaknesses. The models are examined with respect to the impact of various trading mechanisms on price formation, information findings, buoyancy and trading behaviour. This paper discusses the bid-ask spread which is of course, a major component of price; and it is a chain of many factors which includes the market maker or dealer’s costs, and information availability, as well as signaling effects. It concludes that the Nigeria Capital Market will benefit from the use of Operations Research Models. It recommends that Market Operators should be educated with these Operations Research Models.
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