Dispersed Trading and the Prevention of Market Failure: The Case of the Copenhagen Stock Exchange

With augmented demands on power grids resulting in longer and larger blackouts <p> combined with heightened concerns of terrorist attacks, trading institutions and policy <p> makers have widened their search for systems that avoid market failure during these <p> disturbing events. We provide insight into this issue by examining trading behavior at the <p> Copenhagen Stock Exchange during a major blackout. We find that although market <p> quality declined, markets remained functional and some price discovery occurred during <p> the blackout period suggesting that the NOREX structure of interlinked trading systems <p> combined with widely dispersed trading locations may be a viable means of protection <p> against market failure during massive power disruptions or terrorist attacks.