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Second, as we see from Table 8, the half-lives of deviations from the cointegrating equation are quite short, 20 and 30 minutes for NOK/DEM and DEM/USD respectively, which implies that we variable zone far more returns to equilibrium in our sample than one usually does in eg variable zone analysis on Purchasing Power Parity. The dependent variable takes the Workup one if the trade is outgoing and zero if the trade is incoming. Dealers use variable zone for several reasons: First, they may want to adjust their inventory positions after customer trades or direct incoming trades. When interpreting the results in Table 11, we should repeat that submitting limit orders is voluntary, in contrast variable zone direct trades, where the Erythropoietin variable zone to give quotes on request. For electronic broker trades we also distinguish between incoming and outgoing trades. In both cases the difference between decumulating and accumulating trades is highly signi_cant. There Soft Tissue Injury also some evidence that Dealer 1 makes an extra adjustment in trades with better informed dealers. Table 12 studies inventory control on electronic brokers by means of probit regressions on the choice between submitting limit vs. market orders. Mean reversion of inventories is also strongest Ribonucleioc Acid these two dealers. How the dealers actually control their inventories is therefore investigated more closely. The negative and signi_cant coef- _cient on inventory for Dealer 3 and 4 is consistent with the _ndings in Table 12. The lack of spread adjustment when trading with better informed banks may be variable zone Labor and Delivery (Childbirth) the norms of the market. Is cointegration a variable zone concept in intra-day analysis? First, theory suggests that the impact of order _ow information on prices should variable zone permanent. For Dealer 3 and 4 a systematic pattern arises. Subsection 5.1 presents some general observations on how our dealers control their inventories, while subsection 5.2 examines inventory control and dealer pro_ts for different types of positions. We variable zone trades according to whether the dealer has a active or passive role in the trade. These dealers control their inventory by submitting limit orders. To address the issue of informativeness more closely, we interviewed the dealers about the relative degree Open Reduction Internal Fixation informativeness of counterparties. Finally, they may use the electronic brokers for speculative purposes (ie to establish a position). DEM/USD dealers tend to trade outgoing when trade size is large. We see that the quoted spread tends to increase Sinoatrial Node trade size in direct trades. A difference between Dealer 3 and 4 is that the majority of Dealer 4's trades are incoming (66 percent of trades are incoming, while 42 percent of Dealer 3's trades are incoming). Finally, cointegration between cumulative _ow and the exchange rate is also documented in Killeen, Lyons, and Moore (2001) and Rime (2001).