In recent years, regulators of financial centers have attempted to criminalize practices traditionally and begrudgingly accepted by the market.In 2007, a federal judge in the Southern District of New York effectively halted the government's attempts at prohibiting interpositioning, a...

We exploit a discontinuity in the New York Stock Exchange Designated Market Maker (DMM) contract to identify causal effects of DMM participation on equilibrium market outcomes. We document that contractual features that enhance DMM participation are associated with increased depth, narrower...