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This paper investigates how the control benefits of a broker's structural position are constrained by the perceived quality of actors a broker may represent in an exchange. The author proposes that brokers prefer to represent high quality actors but also that the value an actor places on representation is inversely related to the actor's perceived quality. This tension implies that neither the actors that value representation most nor the actors that brokers would most like to represent are most likely to be represented by a broker. The author also proposes that this quality constraint on the control benefits of brokerage is mitigated by the matching of reputable brokers with high quality actors.
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