PT  - JOURNAL ARTICLE
AU  - Lynn Phillips Kugele
AU  - Robert A. Wood
TI  - Trade Shredding
AID  - 10.3905/jot.2007.669797
DP  - 2006 Dec 31
TA  - The Journal of Trading
PG  - 9--29
VI  - 2
IP  - 1
4099  - https://pm-research.com/content/2/1/9.short
4100  - https://pm-research.com/content/2/1/9.full
AB  - Trade Shredding — the practice of breaking orders into smaller, multiple trades solely for the purpose of generating market data revenue — has been an ongoing object of concern, comment and controversy. In this research, we address three questions regarding the practice of trade or tape shredding. First, what market dynamics — economic and regulatory — combined to provide a climate that was amenable to and even encouraged trade shredding? Second, while there is virtually no argument that trade shredding has occurred can it be isolated; is it observable in the market data? Finally, the battle for market data revenue is considered to have been a major driver of the market data portion of Regulation NMS. But will Reg NMS' new, more complex formula succeed in eliminating this distortive practice?TOPICS: Exchanges/markets/clearinghouses, legal/regulatory/public policy