When seeking to trade in over-the-counter markets, institutional investors typically restrict both the number of potential counterparties they contact and the information they disclose (e.g., by requesting two-sided rather than one-sided quotes). We rationalize these important facts in a model featuring endogenous front-running. Although an additional contact intensifies competition and aids in finding a natural counterparty, it also intensifies information leakage—which can be costly if it helps a losing dealer to front-run. We also address information design: the client optimally provides no information about her trading direction when requesting quotes. We conclude with implications for market design and regulation.

中文翻译：

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竞争与信息泄露

当寻求在场外市场进行交易时，机构投资者通常会限制他们联系的潜在交易对手的数量以及他们披露的信息（例如，通过要求双边报价而不是单边报价）。我们在一个具有内生抢先交易的模型中合理化了这些重要事实。虽然额外的联系会加剧竞争并有助于找到自然的交易对手，但它也会加剧信息泄露——如果它帮助失败的经销商抢先，这可能会付出高昂的代价。我们还解决信息设计问题：客户在请求报价时最好不提供有关其交易方向的信息。我们最后总结了对市场设计和监管的影响。