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1 – 10 of 47Benjamin Taupin and Marc Lenglet
In this article, we make the point that managerial domination as described by pragmatic sociology is an appropriate notion to make sense of complex forms of domination in…
Abstract
In this article, we make the point that managerial domination as described by pragmatic sociology is an appropriate notion to make sense of complex forms of domination in contemporary organizations. Based on Lemieux’s work on ‘grammars’, we complement approaches of complex domination put forward by pragmatic sociologists such as Boltanski and Thévenot. We illustrate these ideas by means of an ethnographic study of the financial intermediation industry. Our analysis sketches out an alternative conceptualization of power in such environments, and by so doing, helps us delineate the features that characterize complex financial domination. We conclude by arguing that this type of domination is the result of specific contradictions inherent to the grammars of financial intermediation.
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The debate over the possible extension of transparency regulation in Europe to include sovereign bonds has opened up a number of other issues in need of serious consideration. One…
Abstract
Purpose
The debate over the possible extension of transparency regulation in Europe to include sovereign bonds has opened up a number of other issues in need of serious consideration. One such issue is the appropriateness of the entire infrastructure supporting the trading of European sovereign bonds. In recent years, sovereign issuers have supported the development of an electronic inter‐dealer market but have remained unconcerned with the opacity of dealer‐to‐customer trading. The degree of segmentation in this market is high relative to what exists in nearly all other financial markets. The purpose of this paper is to outline the transparency proposals for European sovereign bond markets.
Design/methodology/approach
This paper explores why European sovereign bond markets have developed in such a segmented way and considers how this structure could be altered to improve transparency without adversely affecting liquidity, efficiency or the benefits enjoyed by primary dealers and issuers.
Findings
It is suggested that the structure of the market could be improved greatly if the largest and most active investors were permitted access to the inter‐dealer electronic trading platforms. This would solve a number of market imperfections and increase the proportion of market activity that is conducted in a transparent way.
Originality/value
The paper argues that sovereign issuers in Europe have the means to provide incentives that would influence dealers to support reduced segmentation. Some practical examples of how this could be achieved are provided and the potential benefits are outlined.
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Chiou-Fa Lin, Cheng-Huei Chiao and Bin Wang
The purpose of this paper is to examine the impact of post-trade transparency on price efficiency and price discovery.
Abstract
Purpose
The purpose of this paper is to examine the impact of post-trade transparency on price efficiency and price discovery.
Design/methodology/approach
The authors use an exogeneous change in market transparency in the Taiwan Stock Exchange that mandates the disclosure of unexecuted orders of the five best bid and ask prices after each trade, and conduct an event study analysis.
Findings
After the change, price efficiency enhances for both large and small firms, although the impact on stock prices is greater when the firm is larger. The authors also find that post-change trading reveals more private information for large firms but more public information for small firms. The findings support the view that transparency has a positive impact on market quality.
Originality/value
The paper adds to a large body of literature investigating the relationship between transparency and market behavior, especially the ongoing debate about whether trading transparency positively affects price dynamics. The findings also have important policy implications for the regulators.
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Abhinava Tripathi, Vipul and Alok Dixit
This study aims to provide a systematic literature review of the research study in the area of limit order book (LOB) mechanism of trading and its implications for market…
Abstract
Purpose
This study aims to provide a systematic literature review of the research study in the area of limit order book (LOB) mechanism of trading and its implications for market efficiency. The study attempts to document the recent theoretical developments and empirical findings from the literature exhaustively and identifies the research gaps for future research.
Design/methodology/approach
The study uses seven reputable databases to select 2,514 research studies spanning over 1981-2018 (finally compressed to a pool of 103 articles, based on relevance and impact). The study uses bibliometric network visualization and text analytics to categorize and examine the literature. The chosen articles are compiled and analyzed to provide a comprehensive account of the current research on LOBs.
Findings
The recent LOB literature is summarized on various criteria as follows: sub-areas, the types of economies and markets, methodologies and the LOB measures. The review identifies a dearth of studies on the LOBs in emerging markets. It suggests the potential research areas as intraday studies in emerging LOB markets; application of market indicators based on deeper levels of LOB, beyond the best prices; market fragmentation, order routing decision and its impact on order execution quality; optimal display of LOB levels; liquidity dynamics in quote-driven markets vis-à-vis LOB markets; effect of high-frequency trading on market microstructure; application of advanced techniques (e.g. machine learning models, zero-intelligent models); relationship between the trading speed, order aggressiveness, shape and resilience of the order book and informed trading; and information content of the auxiliary order submission strategies, including cancellation, amendments and hidden orders.
Originality/value
For the past 15 years, to the best of the knowledge, a comprehensive review of the literature on LOBs has not been published. The financial markets have transformed significantly over this period, driven by the adoption of LOBs, low latency trading and technological advancements in information dissemination. This article provides an extensive collection and classification of the literature on LOBs. This would be useful for the practitioners, future researchers and academics in the area of financial markets.
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Russel Poskitt, Alastair Marsden, Nhut Nguyen and Jingfei Shen
The purpose of this paper is to examine the impact of the introduction of anonymous trading on the liquidity of New Zealand Stock Exchange (NZX)‐listed stocks.
Abstract
Purpose
The purpose of this paper is to examine the impact of the introduction of anonymous trading on the liquidity of New Zealand Stock Exchange (NZX)‐listed stocks.
Design/methodology/approach
The paper examines the impact of the switch to anonymous trading on effective spreads and adverse selection costs using both univariate and multivariate approaches and data spanning a 240‐day event window period. The paper also compares the NZX's share of trading in cross‐listed stocks before and after the switch to anonymous trading to determine if the change in market architecture improved the NZX's competitiveness vis‐à‐vis the Australian Stock Exchange (ASX).
Findings
The paper finds that effective spreads and adverse selection costs increased following the switch to anonymous trading across the broad range of NZX50 stocks, consistent with an increase in information risk in the post‐event period. However, the paper also finds that the switch to anonymous trading improved the NZX's market share in trading in cross‐listed stocks vis‐à‐vis the ASX.
Originality/value
The results show that market liquidity deteriorates in a more opaque environment due to the greater information risk facing investors. This is in sharp contrast to prior research, which reports that similar changes in pre‐trade transparency on other exchanges have improved market liquidity. The results suggest that although institutional investors and the NZX itself might well have benefited from the switch to anonymous trading, liquidity demanders face higher transaction costs as a result.
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This study aims to explore the failures of Tunisian secondary corporate bond market liquidity to understand the determinants of corporate bond market liquidity at large.
Abstract
Purpose
This study aims to explore the failures of Tunisian secondary corporate bond market liquidity to understand the determinants of corporate bond market liquidity at large.
Design/methodology/approach
We adopted a qualitative approach to studying the Tunisian Stock Exchange. Dealers’ perceptions were collected through semi-structured face-to-face interviews; the data was recorded, transcribed and thematically analysed.
Findings
Secondary corporate bond market failures are due, in part, to microstructural choices – especially the use of an over-the-counter market as a trading venue. The absence of a corporate bond yield curve, a narrow investor base, market participants’ lack of financial education and authorities’ attitudes are equally responsible.
Research limitations/implications
This study is useful to researchers, policymakers and practitioners, as it identifies microstructural and other factors affecting the Tunisian secondary corporate bond market. We interviewed only Tunisian dealers while ignoring other categories of market participants. Furthermore, a focus group discussion could have improved our understanding of the determinants of the Tunisian secondary corporate bond market.
Originality/value
This paper aimed to qualitatively discuss several issues related to the Tunisian secondary corporate bond market. To date, little academic research has addressed this topic in the illiquid and non-transparent corporate bond markets.
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Natalia Sokolova and Tamer Bahgat
The purpose of this paper is to alert the European high-yield market to several regulatory developments relating to the adoption of markets in financial instruments directive…
Abstract
Purpose
The purpose of this paper is to alert the European high-yield market to several regulatory developments relating to the adoption of markets in financial instruments directive (MiFID) II.
Design/methodology/approach
Reviews regulatory developments in connection with the MiFID II adoption and implementation, identifies several practical implications for the high-yield market professionals and suggests certain modifications in the banks’ internal protocols and practices that may be required as a result.
Findings
When the provisions of MiFID II are applied on January 3, 2018, they may have a dramatic impact on global financial markets, including a number of practical implications for the high-yield bond market. The burden of implementing MiFID II will be primarily on banks and brokers with minimal impact on the high-yield issuers.
Originality/value
Practical guidance from experienced high yield, securities and financial services lawyers.
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The EU’s Financial Services Action Plan (FSAP) which seeks to harmonise financial servicesacross Europe has the potential to bring great benefits to the investment community …
Abstract
The EU’s Financial Services Action Plan (FSAP) which seeks to harmonise financial services across Europe has the potential to bring great benefits to the investment community ‐ particularly the UK which already has a wealth of expertise. But in order for it to succeed the rule makers need to recognise some basic principles ‐ principally that they should focus on what is necessary to achieve their goal, rather than what is merely desirable. This paper outlines these principles of successful regulation and looks specifically at some of the problems in the most controversial of the current proposals ‐ the Investment Services Directive (ISD).
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This paper aims to discuss the impact of nascent Markets in Financial Instruments Directive (MiFID II) initiatives and, thus, to deliver practical insights into MiFID II…
Abstract
Purpose
This paper aims to discuss the impact of nascent Markets in Financial Instruments Directive (MiFID II) initiatives and, thus, to deliver practical insights into MiFID II implementation, compliance and cost reduction MiFID II constitutes the backbone for the upcoming financial market reforms. With the first proposal of MiFID drafted in October 2011, this regulatory framework has undergone over 2,000 amendments. As MiFID II currently stands, this Directive attempts to address issues exposed by the global financial crisis.
Design/methodology/approach
This study, based on secondary research and an in-depth analysis of the MiFID II framework, investigates structural and technological challenges entailed by this Directive. The analysis is broken down into the following sections: technological and structural challenges; costs of implementation; MiFID II teams; facilitating near real-time regulatory reporting; increased transparency requirements; and information technology (IT) initiatives for MiFID II compliance.
Findings
MiFID II commands significant changes in business and operating models. With this in mind, the study indicates current technological and structural challenges faced by financial institutions and advises on ways of mitigating MiFID II risks. Although it is too early to assess the costs of implementing MiFID II, this paper suggests ways of reducing MiFID II-related costs. The study also advises on organising dedicated teams to deal with MiFID II. Furthermore, this paper argues that early investments in IT systems and processes would allow financial services firms to gain a competitive advantage and, hence, scoop up market share or launch new, lucrative services – especially in the area of collateralisation and market data processing.
Originality/value
This paper shows that the current version of MiFID II still requires a great deal of attention from the regulators that need to readdress contentious issues revolving around the links between MiFID II and other regulatory frameworks such as European Market Infrastructure Regulation and Dodd–Frank. This study addresses the MiFID II compliance issues by adopting European Union and non-European Union banks’ and asset managers’ perspectives and, hence, delivers practical implications for risk managers and compliance officers of various financial institutions.
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