Comparison between Floor Trading and Electronic System on Liquidity
Agha Amad Nabi, Melati Ahmad Anuar, Suresh Ramakrishnan, and Aiyoub Ahmadimousaabad
Abstract: A trend towards computerized transaction points out a significant query that either electronic cost which is occurring in trading system is lower than that of trading through floors. Trading system is how orders are handled and how they are administered and how individual prices are been setup. The trading affects the profitability and hence it affects traders’ behavior, price formation and trading cost. Data of returns of KSE 100 index from the period of January1998 to June 2008 and the variables that have the significant difference in the Electronic system are volume, market capitalization, volatility and turnover. Thus, electronic system shows more information in a limited time when volume and return volatility is high. The results and findings indicated that the electronic system has a significant edge over trading by floors.