Do the Italian STARs' shine in a Hybrid Market?

In the last few years, market microstructure literature increasingly focused on hybrid markets, with actual markets offering some major examples of transitions to this market structure, like London Stock Exchange (the SET segment) and most of European exchanges (in various segments). This paper provides unique additional evidence represented by the Italian Stock Exchange, an order driven market that in 2001 experienced the introduction of the STAR segment assisted by market makers, so resulting in a hybrid market. The empirical evidence shows that the STAR stocks experienced an improvement in liquidity (measured by trading volumes and spreads) and in the price discovery process, and to some extent it is possible to argue that these improvements are mainly due to the specialist’s activity.