Centralizing Over-the-Counter Markets?

In traditional over-the-counter (OTC) markets, investors trade bilaterally through intermediaries referred to as dealers. An important regulatory question is whether centralize OTC markets by shifting trades onto centralized platforms. We address this in the context of liquid Canadian government bond market. document that even market, dealers charge markups, and show there a price gap between large who have access platform small do not. specify model quantify how much due assess welfare effects. The predicts not all would use if were universal. Nevertheless, close 32%-47%. Welfare increase 9%-30% because more are conducted high values trade, for instance, they seek sell inventory.