Imperfect competition between operators in the financial markets.

Summary The purpose of this thesis is to contribute to a better analysis of the impact of market practices on competition between market participants. The first essay focuses on the practice of private information exchange. We consider a market in which brokers have access to (i) 'fundamental' information on the net asset value of the risky asset and (ii) non-fundamental information on the volume of orders placed by uninformed investors. We show, in the framework of the Kyle (1985) model, that it can be profitable for two differently informed brokers to share information. Information sharing has an ambiguous impact on liquidity, but it increases informational efficiency and price stability. It also reduces transaction costs, suggesting a beneficial impact of this practice on market performance. The second essay analyzes how the practice of preferencing affects the quoting strategies of two risk-averse market makers. Preferencing allows a market maker - the so-called 'preferred' market maker - to execute orders exclusively, outside the central market. Regardless of the market structure (centralized or fragmented), we show that this practice reduces the incentives of market makers to quote competitive prices. It therefore leads to an increase in the price ranges and profits of market makers. However, the position risk involved in preferencing can generate losses for the executing market maker. In the third test, we show that the preferred market maker may therefore find it profitable to communicate the status of his preferred order flow to his competitor when he is not observing it. The communication helps to steer the posted prices in a direction that favors loss reduction. Using pre-opening data from the Nasdaq, we find that the market makers known to be the most favored (the "wholesalers") are among those who participate the most in the communication game between market makers. However, wholesalers' signals contribute the least to daily price discovery and are concentrated in stocks that are strongly linked to preferencing. Moreover, at the Nasdaq opening, we find that wholesaler prices and best market prices have a significant transitory component, supporting the idea of position risk communication.