A tale of two trading venues: electronically delivered orders vs. floor brokered orders on the American stock exchange

At the American stock exchange (Amex), electronically-routed orders (referred to as system orders) from "upstairs" traders interact on the Amex trading floor with each other and with orders worked by brokers. In addition, we see that brokers receive orders from clients and other traders who have chosen to involve a floor broker as an intermediary in the trading process. The quality of the trading outcomes for system orders, compared to brokered orders, differs considerably, and these results have important implications for market structure design. The paper considers electronic orders vs. floor brokered orders.