marktcrowding
Marktcrowding is a term used in economics and market design to describe a state in which a market experiences a high concentration of participants and rapid order flow, leading to intense competition for trades and crowding effects in liquidity. In such conditions, order arrivals outpace the market's ability to absorb them, causing frequent price moves and potential distortions in price discovery.
The phenomenon can arise in electronic and online marketplaces where entry barriers are low and information
Implications of marktcrowding include thinner visible liquidity in some price levels, wider or less stable spreads
Researchers measure marktcrowding via indicators such as order book depth at best quotes, changes in bid-ask
Policy and design responses include circuit breakers, throttling or rate limits on order submissions, and improved