The Microstructure of Multiple-Dealer Equity and Government Securities Markets: How They Differ

Although dealership government and equity securities have, on the surface, similar market structures, the author demonstrates that some subtle differences exist between them that are likely to significantly affect the way market-makers trade, and as such have an impact on the liquidity that they provide. The author reviews some of the concepts recently introduced in the literature, examining multiple-dealer equity markets, and delineates gaps that exist in this literature in terms of its applicability to government securities markets.