In the over-the-counter market, what are the incentives for investors and dealers to quote aggressively?
In the over-the-counter market, investors have the same incentive as in any other market to aggressively quote to achieve the best possible execution. The dealer, on the other hand, will always have the conflicting economic incentive to receive the greatest possible economic reward for himself by executing at the widest possible spread and delivering the best available (NBBO) execution.
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