Do brokers act in the best interests of their clients? New evidence from electronic trading systems

Game, Annilee and Gregoriou, Andros (2016) Do brokers act in the best interests of their clients? New evidence from electronic trading systems. Business Ethics: A European Review, 25 (2). 187–197. ISSN 1467-8608

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Abstract

Prior research suggests brokers do not always act in the best interests of clients, although morally obligated to do so. We empirically investigated this issue focusing on trades executed at best execution price, before and after the introduction of electronic limit-order trading, on the London Stock Exchange. As a result of limit-order trading, the proportion of trades executed at the best execution price for the customer significantly increased. We attribute this to a sustained increase in the liquidity of stocks as a result of limit-order trading, regardless of market capitalisation. We discuss the ethical implications of our findings and conclude that market structures that enhance market competitiveness may help reconcile broker and client interests.

Item Type: Article
Additional Information: "This is the peer reviewed version of the following article: Game, A. M. and Gregoriou, A. (2016), Do brokers act in the best interests of their clients? New evidence from electronic trading systems. Business Ethics: A European Review, 25: 187–197, which has been published in final form at http://doi.dx.org/10.1111/beer.12066. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving."
Faculty \ School: Faculty of Social Sciences > Norwich Business School
Depositing User: Pure Connector
Date Deposited: 09 Mar 2016 16:00
Last Modified: 05 Oct 2020 23:37
URI: https://ueaeprints.uea.ac.uk/id/eprint/57395
DOI: 10.1111/beer.12066

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