Insider trading, market manipulation and other illegal trading activities cost US$3.4 billion last quarter, down from US$6.2 billion the quarter before that, Capital Markets Co-operative Research (CMCR) said in a report.
The report also said Asia-Pacific markets had half the integrity of markets in the United States and a quarter of the efficiency.
"While some of this can be attributed to the size of markets, it's not all driven by size," CMCR chief scientist Michael Aitken said.
"Using data from the last quarter, we found information leakage - the CMCR's proxy for insider trading - was associated with 16 per cent of price-sensitive announcements in North American markets, compared to 20 per cent in European markets and 32 per cent in Asia-Pacific markets," Aitken said.
Insider trading translated to a mean of US$401 million in North American markets, US$31 million in European markets and US$165 million in Asia-Pacific markets, he said.
Market manipulation cost far less over the quarter, coming in at US$88 million in North America, US$41 million in Europe and US$33 million in the Asia-Pacific region.
Aitken's team has been developing market quality framework measures for more than 10 years to show changes in market quality and efficiency over time.
"The problem regulators have globally is a lack of a framework with which to address their mandate of ensuring that markets are fair and efficient," Aitken said.
"Obviously it's very difficult to create appropriate regulation when you don't have solid measures and data to base it on."
Three securities regulators from each of the major time zones were funding postgraduate students to apply the framework to their respective exchanges, he said.
He said he hoped more exchanges took up the market-quality template.
