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In this chapter, we apply the new measure of speculative activities (hereafter, named the speculative ratio) in Chan, Nguyen, and Chan (2013) to study the relationship between those activities and volatility in the oil futures market. We document that the speculative ratio (trading volume divided by open interest) can isolate speculative elements from total trading activities. Using the oil futures data and dividing the data into two subperiods surrounding Hurricane Katrina, we find an increased speculative trades in the post-Hurricane Katrina period. Our results show that speculative activities create a more volatile oil futures market and they lower the information flow between volatility and speculative activities in the post-Hurricane Katrina period.

This study explores the price linkage between the Chinese commodity futures market and other dominant futures markets, and examines the forces behind the price linkages. The contribution by the trading hour innovations in the United States (or United Kingdom) market to the overnight price changes in the Chinese market is larger in scale than the contribution by the daytime information from the Chinese market to the overnight returns of the corresponding US (or UK) market. Several futures have significant interactions of the domestic and foreign factors in the price linkages while the Chinese domestic factors explain better the global market price linkage in some futures (aluminum, gold, and corn), demonstrating the leading role of the Chinese futures markets in these world markets.

Purpose — The purpose of this chapter is to study the pattern of rogue trading, paying special attention to the aspects of the dishonest behavior of perpetrators.Design/methodology/approach — The chapter discusses selected cases of rogue trading that received the largest coverage by the mass media.Findings — No unique pattern of rogue trading schemes can be identified; however, certain similarities can be brought up based on the discussed cases. There are many aspects of dishonesty involved in fraudulent trading besides illicitness of unauthorized trading as such.Research limitations/implications — The chapter is based largely on a literature review and available data on the instances of rogue trading; probably, there is a vast amount of rogue trading cases undisclosed in order to draw a bigger picture.Originality/value — We apply the framework of white-collar crime process by McKay, Stevens, and Fratzl (2010) in order to clarify whether rogue trading schemes match the development of a typical white-collar crime. Conclusions are built on the analysis of several cases.

We investigate institutional investors’ trading behavior of acquiring firm stocks surrounding merger activities for the period 1992–2001. We label investment companies and independent investment advisors as active institutions and banks, nonbank trusts, and insurance companies as passive institutions. We analyze the trading behavior of active and passive institutions surrounding merger announcements and their eventual resolution. Our results indicate that active institutions significantly increase their holdings of acquiring firm stocks for mergers with higher announcement period abnormal return and this increase is more pronounced for stock mergers than cash mergers. Active institutions display preference for stock proposals at the merger announcement on the basis of their prior beliefs and this is explained by the “overreaction phenomenon.” However, they update their beliefs between announcement and final resolution as more information arrives into the market. Finally, active institutions appear to correct their overreaction behavior by displaying their greater preference for cash proposals as compared to stock proposals at the quarter of eventual outcome. The trading behavior of passive institutions suggests that these institutions disregard the market response of merger announcement in trading acquiring firm stocks at the announcement quarter. The passive institutions gradually update their beliefs and utilize the information released at the announcement in rebalancing their portfolios at the final resolution.

Sustainability performance of the global trade as well as of the traded products are affected by the trade policies and trade tariffs. Trade tariffs and policies can either encourage or discourage trade among the countries affecting feasibility of trade. In other words, the scope and amount of these trade tariffs have impact on the trade globally. Based on an in-depth literature review, this chapter aims to examine impacts of the trade policies and trade tariffs on the environmental footprint of the global trade. With this aim, recent trade policies and trade tariffs as well as roles of the trade policies, trade tariffs in reducing environmental footprint of the global trade are examined. It arrives at the conclusion that trade tariffs can affect environmental footprint of the global trade as well as of the traded products. They can have impact on the feasibility of the trading activities influencing their profit margins and costs. Based on these findings, recommendations for trade policies and trade tariffs are thereby provided to enhance sustainability performance of the global trade.

When a stock is added into the S&P 500 Index, it in effect becomes cross-listed in the Index derivative markets. When index-based trading strategies such as index arbitrage are executed, the component stocks are directly affected by such trading. We find increased volatility of daily returns, plus increased trading volume for the underlying stocks. Utilizing a list of S&P 500 Index composition changes over the period September 1976 to December 2005, we study the market-adjusted volume turnover and return variance of the stocks added to and deleted from the Index. The results indicate that after the introduction of the S&P 500 Index futures and options contracts, stocks added to the S&P 500 experience statistically significant increase in both trading volume and return volatility. Both daily and monthly return variances increase following index inclusion. When stocks are removed from the index, though, neither volatility of returns nor trading volume experiences any significant change. So, we have new evidence showing that Index inclusion changes a firm's return volatility, and supporting the destabilization hypothesis.

Although stock price co-movement has been examined extensively, its causes are not well understood. Using a decomposition method, we extract three information components from the turnover rate: market information, firm-specific information, and investors' opinion divergence. We find that market information strengthens stock price co-movement, whereas firm-specific information weakens it. Moreover, our analysis shows that divergence of investors' opinion increases stock price variations but weakens price co-movement.

The purpose of this paper is to offer theoretical and methodological guidance for ethnographers of finance and financialization. It critiques the notion of financialization as a macro process and argues for more in-depth ethnographic studies of professional financial actors.

The author analyzes existing ethnographies of financial “elites” and “non-elites” and draws on his years of employment at two contrasting British retail stockbroking firms. The concepts of “identity” and “self” are used to analyze the ways in which professional financial actors are shaped by their activities and working cultures.

The processes through which financial actors are constructed and the consequent ways in which they come to understand their professional selves are influenced by a variety of dynamics: occupational and organizational cultures and practices, the nature of the work itself, technological development, and social interactions with colleagues.

The paper demonstrates the situated nature of financial action and suggests that future research grapples with these dimensions.

The application of an ethnographic perspective to British retail stockbroking and the method of “ethnographic reflection” evoked to achieve this are new contributions. The broad analysis of ethnographies of finance through the lens of identity offers a fresh view of the literature. The paper may be of interest to those wishing to study stockbrokers, financial actors, and financial organizations, as well as those in the social sciences, more generally, who are interested in the micro-dynamics of organizations, financialization, and capital circulation.