Date of Award


Document Type


Degree Name

Master of Arts (MA)

Legacy Department



Maloney, Michael


In an attempt to foster competition between financial exchanges, the Securities and Exchange Commission developed the National Market System Plan. With the exchanges competing for market share, there is potential for the loss of property rights of price quotes developed by the dominant exchange. The smaller exchanges will free ride on the dominant exchange`s price quotes and 'cream skim' the less risky trades. This research develops a model of CBOE (the dominant options exchange) market share to show evidence of 'cream skimming.' The variables in the model of market share give insight into the risk and profitability of the option contract and show that the smaller markets gain market share in less risky higher profit options. This result supports the hypothesis of 'cream skimming.'

Included in

Economics Commons