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Fairness in Financial Markets

Author : James Angel

Publisher :

Page : 25 pages

File Size : 25,23 MB

Release : 2014

Category :

ISBN :

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Book Description

Recent concern over "high frequency trading" (HFT) has called into question the fairness of the practice. What does it mean for a financial market to be "fair"? We first examine how high frequency trading is actually used. High frequency traders are often implementing traditional beneficial strategies such as market making and arbitrage, although computers can also be used for manipulative strategies as well. We then examine different notions of fairness. Procedural fairness can be viewed from the perspective of equal opportunity, in which all market participants are treated alike. The same rules apply to HFT as to other traders. Another approach to fairness is in the equality of outcomes. Many HFT strategies are beneficial to other market participants, so one cannot categorically denounce the practice as unfair. Other strategies, for both high and low frequency trading, are not. It is thus important to distinguish between the technology and the use of the technology to make judgments on fairness.



Fairness in Practice

Author : Aaron James

Publisher : OUP USA

Page : 381 pages

File Size : 23,36 MB

Release : 2012-04-13

Category : Business & Economics

ISBN : 0199846154

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Book Description

In this book, the author argues that to achieve a fair global economy, there must be compensation of people harmed by their exposure to the global economy, but also equal division of the "gains of trade" across societies.





Is it Fair? Perceptions of Fair Investment Behavior Across Countries

Author : Meir Statman

Publisher :

Page : 13 pages

File Size : 24,69 MB

Release : 2015

Category :

ISBN :

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Book Description

Fairness matters to financial advisors, whether fairness in financial markets or fairness in their relations with clients. Yet perceptions of fairness vary greatly and they are hotly debated everywhere, including politics, education, medicine, law, and finance. I explore fairness in finance in the context of insider trading.Do perceptions of the fairness of insider trading correspond to the law? Do they vary by knowledge of the law? Are perceptions of fairness universal, or do they vary across countries? Do they vary across groups, such as the groups of university students and finance professionals? Do they depend on the incomes of traders or whether traders have sure or only probabilistic information? Do they depend on whether an intermediary is involved?I use surveys to uncover the features that underlie perceptions of the fairness of insider trading in the stock and car markets in eight countries: Australia, India, Israel, Italy, the Netherlands, Tunisia, Turkey, and the United States.Perceptions of the fairness of insider trading in the stock and car markets vary greatly across countries and between professionals and students in each country, and while they are affected by the law they are not subsumed by it. Perceptions of the fairness of insider trading in the stock market, but not the car market, are related to the Corruption Perceptions Index and stock market participation.



Regulating Competition in Stock Markets

Author : Lawrence R. Klein

Publisher : John Wiley & Sons

Page : 403 pages

File Size : 25,41 MB

Release : 2012-04-25

Category : Business & Economics

ISBN : 1118236866

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Book Description

A guide to curbing monopoly power in stock markets Engaging and informative, Regulating Competition in Stock Markets skillfully analyzes the impact of the recent global financial crisis on health and happiness, and uses this opportunity to put regulatory systems in perspective. Happiness is lost because of emotional and physical health deterioration resulting from the crisis. Therefore, the authors conclude that financial crisis prevention should be the focus of public policy. This book is the most comprehensive study so far on potential risks to the stock market, especially various forms of market manipulation that lead to mania and eventual crisis. Based on litigation cases from international stock markets, and borrowing multidisciplinary findings in the fields of finance, economics, accounting, media studies, criminology, legal studies, psychology, and medicine, this book is the first to provide thorough micro-level regulatory proposals rooted in financial reality. By focusing on securities trading, they apply antitrust measures to limiting monopolistic power that is used for the manipulation of investors' perception and monopolistic profit. These proposals are quantifiable, adjustable, inexpensive, and can be easily implemented by any securities regulating agency for real-time oversight and daily operations. The recommendations found here are intended to improve the fairness and transparency of the financial markets, thereby perfecting the market competition, protecting investors, stabilizing the market, and preventing crises Explores how avoiding crises can to contribute to a more scientific, health aware, and civilized economic and social development Written by a team of authors who have extensive experience in this dynamic field, including Nobel Laureate Lawrence R. Klein Since the founding of the first, organized stock exchange in Amsterdam 400 years ago, no systematic economic research results on stock markets have been implemented in stock market regulation around the world. Regulating Competition in Stock Markets aims to fill this void.



Free Market Fairness

Author : John Tomasi

Publisher : Princeton University Press

Page : 380 pages

File Size : 48,22 MB

Release : 2013-05-05

Category : Business & Economics

ISBN : 0691158142

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Book Description

A provocative new vision of free market capitalism that achieves liberal ends by libertarian means Can libertarians care about social justice? In Free Market Fairness, John Tomasi argues that they can and should. Drawing simultaneously on moral insights from defenders of economic liberty such as F. A. Hayek and advocates of social justice such as John Rawls, Tomasi presents a new theory of liberal justice. This theory, free market fairness, is committed to both limited government and the material betterment of the poor. Unlike traditional libertarians, Tomasi argues that property rights are best defended not in terms of self-ownership or economic efficiency but as requirements of democratic legitimacy. At the same time, he encourages egalitarians concerned about social justice to listen more sympathetically to the claims ordinary citizens make about the importance of private economic liberty in their daily lives. In place of the familiar social democratic interpretations of social justice, Tomasi offers a "market democratic" conception of social justice: free market fairness. Tomasi argues that free market fairness, with its twin commitment to economic liberty and a fair distribution of goods and opportunities, is a morally superior account of liberal justice. Free market fairness is also a distinctively American ideal. It extends the notion, prominent in America's founding period, that protection of property and promotion of real opportunity are indivisible goals. Indeed, according to Tomasi, free market fairness is social justice, American style. Provocative and vigorously argued, Free Market Fairness offers a bold new way of thinking about politics, economics, and justice—one that will challenge readers on both the left and right.





Fair Trading

Author : Meir Statman

Publisher :

Page : 20 pages

File Size : 25,43 MB

Release : 2005

Category :

ISBN :

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Book Description

When we talk about ethics we often talk about fairness. What are the rules of fairness that govern financial trading?Social norms, including rules of fairness, are rules of behavior that are enforced by the community and often make their way into law. Community rules of fairness in financial trading are important to all people since financial markets plays an important part in the economy but they are especially important to investors, both insiders and outsiders, to executives, to investment professionals, to students who plan to become executives or investment professionals, and to regulatory agencies, such as the SEC. I use surveys to elicit rules of fairness from two segments of the community, investment professionals and students. I find that rules of fairness allow one trader to gain advantage over another with information obtained with research, skill or even luck, but they do not allow one trader to gain advantage over another with information, such as inside information, that other traders cannot obtain with research or skill. I find that rules of fairness place special burdens on traders who are well-off and traders who have sure information and that rules of fairness for trading stocks are different from rules of fairness for trading other goods, such as automobiles. I also find differences between the perception of rules of fairness by investment professionals and students.



Three Essays on Fairness, Liquidity, and Efficiency in Modern Financial Markets

Author : Jiang Zhang

Publisher :

Page : 0 pages

File Size : 41,17 MB

Release : 2020

Category :

ISBN :

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Book Description

This dissertation research comprises three essays. In the first essay, we study the impact of high-frequency trading on market fairness and efficiency. The implementation of the Arrowhead Renewal on the Tokyo Stock Exchange (TSE) in 2015 reduced latency from 1 millisecond to less than 0.5 milliseconds and led to an increase in high-frequency tradingas proxied by the cancel-to-trade ratioof 34%, We find that the number of incidents of marking-the-close declined by 17%, indicating that market fairness improves. We find that for high-tick-size and high-market-capitalization stocks market efficiency improves, but for low-tick-size and low-market-capitalization stocks, it does not. In the second essay, we test the implications of competing theories on liquidity dynamics during extreme price movements (EPMs). Our findings indicate that market makers strategically allow for price pressures and earn compensation from pricing errors. As a result, liquidity provision intensifies towards the end of an average EPM. This goes counter to a widespread concern that market-making constraints cause the deterioration of liquidity as EPMs develop. Finally, we demonstrate that limit order book dynamics during EPMs are in line with a socially beneficial equilibrium. In the third essay, we revisit the tax-loss selling hypothesis as a potential explanation of the well-known January effect in securities markets. We expand the empirical evidence from municipal bond closed-end funds by extending the sample period by almost 20 years and adding exchange-traded funds to the sample. Our updated sample covers the recent growth of municipal bond ETFs and a significant increase in municipal bond trading volume and liquidity. Both developments reduce arbitrage costs and thus are expected to increase tax-loss selling in the funds and increase the transmission of price effects to the underlying bonds. We find that the January effect of municipal bond closed-end funds becomes stronger in more recent years, and show evidence that largely supports the tax-loss hypothesis. We also find some evidence indicating a smaller discrepancy between the abnormal returns of the funds and underlying bonds..



Regulating Competition in Stock Markets

Author :

Publisher :

Page : 334 pages

File Size : 26,79 MB

Release : 2012

Category : Competition

ISBN : 9781119202714

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Book Description

A guide to curbing monopoly power in stock markets Engaging and informative, Regulating Competition in Stock Markets skillfully analyzes the impact of the recent global financial crisis on health and happiness, and uses this opportunity to put regulatory systems in perspective. Happiness is lost because of emotional and physical health deterioration resulting from the crisis. Therefore, the authors conclude that financial crisis prevention should be the focus of public policy. This book is the most comprehensive study so far on potential risks to the stock market, especially various forms of m.