This study examines the impact of increasing pre-trade transparency using intraday data from the Taiwanese stock market, which has experienced a gradual increase in transparency. Specifically, we analyze the influence of transparency on information content of the limit order book, and its effect on order placement strategies. According to limit order book information, we evidence four major results. The bid disclosures of institutional investors are more informative than the ask disclosures. The disclosed quotes are more informative than the accompanied depth, and the orders of institutional traders are more informative than those of individual traders. Interestingly, the best quotes of unexecuted orders for individual traders always contain more information than the average quotes from steps 2 to 5, whereas this does not apply for institutional investors, especially for domestic institutional traders. With regard to order strategies, though most of the explanatory power of the limit order book concentrates on the best quotes, however, the book beyond the best quotes also matters in explaining the order aggressiveness of investors.
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