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Derivative Market Competition
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Book Synopsis Derivative Market Competition by : Mr.Jens Nystedt
Download or read book Derivative Market Competition written by Mr.Jens Nystedt and published by International Monetary Fund. This book was released on 2004-04-01 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent regulatory initiatives in the United States have again raised the issue of a 'level regulatory and supervisory playing field' and the degree of competition globally between over-the-counter (OTC) derivatives and organized derivative exchange (ODE) markets. This paper models some important aspects of how an ODE market interrelates with the OTC markets. It analyzes various ways in which an ODE market can respond to competition from the OTC markets and considers whether ODE markets would actually benefit from a more level playing field. Among other factors, such as different transaction costs, different abilities to mitigate credit risk play a significant role in determining the degree of competition between the two types of markets. This implies that a potentially important service ODE markets can provide OTC market participants is to extend clearing services to them. Such services would allow the OTC markets to focus more on providing less competitive contracts/innovations and instead customize its contracts to specific investors' risk preferences and needs.
Book Synopsis Derivative Market Competition by : Jens Nystedt
Download or read book Derivative Market Competition written by Jens Nystedt and published by . This book was released on 2004 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Derivative Market Competition by : Jens Nystedt
Download or read book Derivative Market Competition written by Jens Nystedt and published by . This book was released on 2008 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent regulatory initiatives in the United States have again raised the issue of a quot;level regulatory and supervisory playing fieldquot; and the degree of competition globally between over-the-counter (OTC) derivatives and organized derivative exchange (ODE) markets. This paper models some important aspects of how an ODE market interrelates with the OTC markets. It analyzes various ways in which an ODE market can respond to competition from the OTC markets and considers whether ODE markets would actually benefit from a more level playing field. Among other factors, such as different transaction costs, different abilities to mitigate credit risk play a significant role in determining the degree of competition between the two types of markets. This implies that a potentially important service ODE markets can provide OTC market participants is to extend clearing services to them. Such services would allow the OTC markets to focus more on providing less competitive contracts/innovations and instead customize its contracts to specific investors` risk preferences and needs.
Book Synopsis Derivative Market Competition by : Nystedt T. Jens
Download or read book Derivative Market Competition written by Nystedt T. Jens and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Imperfect Competition in Derivatives Markets by : Christina Brinkmann
Download or read book Imperfect Competition in Derivatives Markets written by Christina Brinkmann and published by . This book was released on 2022 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the push towards central clearing in derivatives markets after the global financial crisis, an open question has been how the development has affected competition. This paper models imperfect competition between dealers in derivatives markets. Two risk-neutral dealers offer derivatives to risk-averse clients with a hedging need, and compete in price (fee) and quality (default probability). I find that with such two-dimensional competition, for given default probabilities, an equilibrium in prices exists that is preferred by both dealers. In this equilibrium the dealer with the lower default probability makes larger profits - a feature, that can produce market discipline to keep the own default probability low. If a central counterparty (CCP) is introduced as an innovation that removes the quality dimension of the competition, this market force pushing for higher qualities vanishes.
Book Synopsis The Market for Derivatives Products: Co-operation Vs Competition by : Barbara Alemanni
Download or read book The Market for Derivatives Products: Co-operation Vs Competition written by Barbara Alemanni and published by . This book was released on 1999 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Derivatives Markets by : Robert Lynch McDonald
Download or read book Derivatives Markets written by Robert Lynch McDonald and published by Addison-Wesley. This book was released on 2003 with total page 881 pages. Available in PDF, EPUB and Kindle. Book excerpt: This text for derivatives courses are suitable for advanced undergraduates and both introductory and advanced derivatives courses at the MBA level. The material in derivatives courses is challenging for most students.
Book Synopsis Competition Without Fungibility by : Söhnke M. Bartram
Download or read book Competition Without Fungibility written by Söhnke M. Bartram and published by . This book was released on 2019 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we compare option contracts from a traditional derivatives exchange to bank-issued options, also referred to as covered warrants. While bank-issued option markets and traditional derivatives exchanges exhibit significant structural differences such as the absence of a central counterparty for bank-issued options, they frequently exist side-by-side, and the empirical evidence shows that there is significant overlap in their product offerings although options are not fungible between the two markets. The empirical analysis indicates that bid-ask spreads in either market are lowered by 1-2% due to competition from the other market, providing evidence that the benefits of competing market structures are available in the absence of fungibility.
Book Synopsis Discriminatory Pricing of Over-the-Counter Derivatives by : Hau Harald
Download or read book Discriminatory Pricing of Over-the-Counter Derivatives written by Hau Harald and published by International Monetary Fund. This book was released on 2019-05-07 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: New regulatory data reveal extensive price discrimination against non-financial clients in the FX derivatives market. The client at the 90th percentile pays an effective spread of 0.5%, while the bottom quarter incur transaction costs of less than 0.02%. Consistent with models of search frictions in over-the-counter markets, dealers charge higher spreads to less sophisticated clients. However, price discrimination is eliminated when clients trade through multi-dealer request-for-quote platforms. We also document that dealers extract rents from captive clients and market opacity, but only for contracts negotiated bilaterally with unsophisticated clients.
Book Synopsis The Development of Financial Derivatives Markets by : Sean M. O'Connor
Download or read book The Development of Financial Derivatives Markets written by Sean M. O'Connor and published by . This book was released on 1993 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Financial Markets. The Bright Side of Financial Derivatives: Options Trading and Firm Innovation by : Iván Blanco
Download or read book Three Essays in Financial Markets. The Bright Side of Financial Derivatives: Options Trading and Firm Innovation written by Iván Blanco and published by Ed. Universidad de Cantabria. This book was released on 2019-02-15 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do financial derivatives enhance or impede innovation? We aim to answer this question by examining the relationship between equity options markets and standard measures of firm innovation. Our baseline results show that firms with more options trading activity generate more patents and patent citations per dollar of R&D invested. We then investigate how more active options markets affect firms' innovation strategy. Our results suggest that firms with greater trading activity pursue a more creative, diverse and risky innovation strategy. We discuss potential underlying mechanisms and show that options appear to mitigate managerial career concerns that would induce managers to take actions that boost short-term performance measures. Finally, using several econometric specifications that try to account for the potential endogeneity of options trading, we argue that the positive effect of options trading on firm innovation is causal.
Book Synopsis Recommendations for Central Counterparties by : Group of Ten. Committee on Payment and Settlement Systems
Download or read book Recommendations for Central Counterparties written by Group of Ten. Committee on Payment and Settlement Systems and published by . This book was released on 2004 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Excessive Margin Requirements and Intermarket Derivative Exchange Competition by : Hans R. Dutt
Download or read book Excessive Margin Requirements and Intermarket Derivative Exchange Competition written by Hans R. Dutt and published by . This book was released on 2008 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excessive margin requirements and intermarket derivative exchange competition: A study of the effect of risk management on market microstructure.
Book Synopsis Electronic Markets and Floor Markets by : Hugues Levecq
Download or read book Electronic Markets and Floor Markets written by Hugues Levecq and published by . This book was released on 2009 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: The internationalization of financial markets and the increasing demand for risk management products have fueled the growth of derivatives markets. While most exchanges have experienced increasing volumes over recent years, the pace of growth varies widely across exchanges, and the established marketplaces face increasing competitive pressures. In this paper, we investigate whether the trading mechanism offered to derivatives investors influences growth in market volumes. In particular,we distinguish between manual open outcry and electronic trading. In a floor market, traders gather in a pit and announce their orders. They complete trades using acombination of hand signals and eye contact. In an electronic market, orders a resubmitted to a central order book, and trades are created according to a matching algorithm. Using volume data from 1990-1994 for futures and options exchanges worldwide, we compute growth rates for the largest contracts and find that contracts traded in screen-based exchanges have experienced faster growth than those traded inmanual markets. We discuss several interpretations of the data, but conclude that electronic exchanges are developing a competitive advantage.
Book Synopsis The Social Life of Financial Derivatives by : Edward LiPuma
Download or read book The Social Life of Financial Derivatives written by Edward LiPuma and published by Duke University Press. This book was released on 2017-10-19 with total page 360 pages. Available in PDF, EPUB and Kindle. Book excerpt: In The Social Life of Financial Derivatives Edward LiPuma theorizes the profound social dimensions of derivatives markets and the processes, rituals, and belief systems that drive them. In response to the 2008 financial crisis and drawing on his experience trading derivatives, LiPuma outlines how they function as complex devices that organize speculative capital as well as the ways derivative-driven capitalism not only produces the conditions for its own existence, but also penetrates the fabric of everyday life. Framing finance as a form of social life and highlighting the intrinsically social character of financial derivatives, LiPuma deepens our understanding of derivatives so that we may someday use them to serve the public well-being.
Book Synopsis Discriminatory Pricing of Over-the-counter Derivatives by : Harald Hau
Download or read book Discriminatory Pricing of Over-the-counter Derivatives written by Harald Hau and published by . This book was released on 2017 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: New regulatory data reveal extensive discriminatory pricing in the foreign exchange derivatives market, in which dealer-banks and their non-financial clients trade over-the-counter. After controlling for contract characteristics, dealer fixed effects, and market conditions, we find that the client at the 75th percentile of the spread distribution pays an average of 30 pips over the market mid-price, compared to competitive spreads of less than 2.5 pips paid by the bottom 25% of clients. Higher spreads are paid by less sophisticated clients. However, trades on multi-dealer request-for-quote platforms exhibit competitive spreads regardless of client sophistication, thereby eliminating discriminatory pricing.
Book Synopsis The Economics of Financial Derivative Instruments by : Godwin Chukwudum Nwaobi
Download or read book The Economics of Financial Derivative Instruments written by Godwin Chukwudum Nwaobi and published by . This book was released on 2009 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: The phenomenal growth of derivative markets across the globe indicates their impact on the global financial scene. As the securities markets continue to evolve, market participants, investors and regulators are looking at different way in which the risk management and hedging needs of investors may be effectively met through the derivative instruments. However, it is equally recognised that derivative markets present market participants and regulators with different and complex regulatory (control) issues, which must be adequately addressed if derivative markets are to gain and maintain investor confidence. And yet, more and more companies are using (or being forced to use) futures and derivatives to stay competitive in a fast-changing world characterised by both unprecedented opportunities and unprecedented risks. Thus, the thrust of this paper is to provide a detailed study of the manner in which the market works and how the knowledge can be used to make profits and avoid losses in a competitive economy setting.
