Dual Trading in Futures Markets

Michael Fishman*, FRANCIS A. LONGSTAFF

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

60 Scopus citations

Abstract

With dual trading, brokers trade both for their customers and for their own account. We study dual trading and find that customers who are less likely to be informed have higher expected profits with dual trading while customers who are more likely to be informed have higher expected profits without dual trading. We also examine the effects of frontrunning. We test the major empirical implications of our model. Consistent with the model, dual traders earn higher profits than non‐dual traders, and customers of dual‐trading brokers do better than customers of non‐dual‐trading brokers. 1992 The American Finance Association

Original languageEnglish (US)
Pages (from-to)643-671
Number of pages29
JournalThe Journal of Finance
Volume47
Issue number2
DOIs
StatePublished - Jan 1 1992

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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