Reduced trading costs benefit investors and increase market competitiveness.
The article explores how bid-ask spreads and trading times are determined in financial markets. Spreads represent the price brokers charge for immediate trades, including trading costs. Traders adjust their actions based on their risk attitudes, with spreads and trade times increasing as risk differences grow. Costs impact trading behavior, with higher costs leading to fewer trades to protect investors. Moving to a competitive market reduces bid-ask fees significantly.