New liquidity scheme boosts market stability and reduces trading costs significantly
The study looked at how a new program called the liquidity provision scheme affected trading in large, popular stocks on NASDAQ Stockholm. This program required traders to place big buy and sell orders at specific prices. The results showed that the program helped make trading easier and cheaper for these stocks, without hurting trading on other markets. The traders in the program, who are likely high-frequency traders, were found to make more stable decisions about buying and selling, even when market conditions changed.