International Journal of Business and Finance Management Research
ISSN: 2053-1842
Vol. 8(4), pp. 56-61 June 2020
doi.org/10.33500/ijbfmr.2020.08.007

Post-trade impact: who wins and who loses?

Shush-Trong Wu and Chiou-Fa Lin*

Department of Finance, National Formosa University, 64, Wunhua Road, Huwei, Yunlin, Taiwan 63201.

*To whom correspondence should be addressed. E-mail: cflin@gs.nfu.edu.tw.

Received 15 May, 2020; Received in revised form 12 June, 2020; Accepted 16 June, 2020.

Keywords:
Effective spread, realized spread, information asymmetry, informed traders, uninformed traders.

This study investigated the impact of an increased post-trade transparency event on the Taiwan Stock Exchange (TSEC). The empirical results obtained indicate that, after the event, there is an ambiguous change in the effective spread, with a significant decrease in information asymmetry and significant increase in the realized spread. The outcomes imply that the event has little impact on trading cost, market liquidity and efficiency, decreasing the profit of informed traders and increasing the profit of uninformed traders, i.e. complete transference of profit between them. It is possible that the event helps uninformed traders avoid being adversely selected and promotes fairness.

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