direction, so that they coordinate exactly when it is undesirable. We analyze the determinants of coordination among speculators and study policy measures that affect patterns of coordination to improve price informativeness and investment efficiency.

In the context of a search model of asset trading with adverse selection, we demonstrate that trading of a financial asset will cease, when its average quality drops sufficiently. A large player, however, can establish trading again, if he removes a sufficiently large quantity of bad assets...