About the scholar
Marzena Rostek holds the Juli Plant Grainger Distinguished Chair in the Department of Economics. An expert in microeconomics, theory of financial markets and game theory, her research has recognized the potential for market decentralization to increase efficiency. Her work suggests new possibilities that economic theory and market design offer in accomplishing certain efficiency, revenue and incentive objectives.
DISCOVER MORE: go.wisc.edu/rostek
The floor of a stock exchange was once the headquarters for financial transactions. In merely a couple of decades, however, financial markets have gone through an unprecedented transformation.
The number of alternative trading venues and the volume of trade outside traditional, open exchanges have increased severalfold.
Looking just at the top U.S. equity markets, the New York Stock Exchange currently creates less than 25 percent of the trading volume of its listed assets. The remaining trades occur in more than 10 other public exchanges, more than 30 private exchanges (restricted mostly to large institutional investors) and more than 200 dealer networks.
Moreover, a significant fraction of transactions has shifted to electronic trading. With advances in financial technology came access to faster speeds, new financial instruments and more flexible and rapidly evolving trading protocols and platforms.
These changes have created unique opportunities to contribute and a sense of urgency.
It would be an understatement to say that financial markets are ahead of economic theory. The financial crisis provided another stimulus to the demand for new models and tools that could inform and assist in evaluating the regulatory reforms that followed.
The rising questions concerning the market structure of the financial system, its efficient design, and, possibly regulation, are core economic questions. These are the questions that keep me up at night.
There is enough to understand to keep an army of researchers busy. In the process, I discovered the joys of working with and learning from UW-Madison students.
This essay originally appeared in the Wisconsin State Journal’s Fueling Discovery section on May 4, 2020. Fueling Discovery is a special partnership between the Wisconsin State Journal and the College of Letters & Science.