Posts Tagged ‘international markets’
Thursday, May 13th, 2010
In this section we return to the transparency of financial markets, which was introduced in Chapter 1. The degree of transparency is relevant because it influences traders’ strategies, hence the pricing process. However, given the great variety of aspects, assessing the effects of pre-trade transparency on market quality is complicated, so it is not surprising that the results offered by the literature differ significantly depending on the market structure considered and the type of information revealed.
If one models transparency as the increased visibility of the liquidity suppliers’ order flows, the effects of pre-trade transparency on market quality will show the benefits of the reduction in adverse selection costs for liquidity and uninformed traders’ welfare.
Clearly, when liquidity suppliers can screen informed and uninformed traders, they can also offer liquidity on better terms to the uninformed. If, however, pre-trade transparency is modelled as the visibility of traders’ identification codes, the effects on market quality can differ, as has been shown by Foucault, Moinas and Theissen (2007) and Rindi (2008). Finally, an often-debated question is the relationship between clients and intermediaries, given that the latter enjoy privileged information on the motivation for their clients’ trades and can exploit this by acting as a counterpart in the trades (dual capacity trading (Röell, 1990) or trading before the clients (front running)).
Tags: get out of debt, income, international markets, money issues, revenue
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Wednesday, October 28th, 2009
The rapid growth of the European corporate bond market since 1997 has promoted the acceptance of corporate bonds as a separate asset class. Therefore, identifying relative value not only between equities and government bonds, but also relative to corporate bonds, has become a central task of asset allocators. But, of course, this analysis is also relevant from the perspective of a pure fixed income investor. Not only does it help to assess the outlook for credit spreads in general, but also to decide on the beta or, in other words, the aggressiveness of a pure corporate bond portfolio relative to its benchmark. Although it has been common use to compare equities and government bonds, it is far less common to compare equities and corporate bonds.
Tags: credit score, get out of debt, income, international markets, making money, merger, money issues, money tips, personal finances, revenue, shares
Posted in accounting, attitude, banking, equity, expenses, finances, merchandise, money spending, negotiationg | Comments Off