State of Information Technology Support for Traders in Fixed Income Markets

A fixed-income security is defined as one whose income stream is fixed for the duration of the loan and where the maturity and face value are known. It is estimated that the global fixed-income market is about $40 trillion with the US having the lion’s share of$19 trillion. There were at least 74 trading platforms in North America and Europe in 2004. However, it is estimated that only about five percent of fixed-income trade is performed through electronic transaction systems. This is very low when compared with use of information systems in support of equity trade. Our research is guided by the following central question: What are the implications of using IT to mediate electronic brokerage relationships that are enacted through the work practices and interactions of actors representing buyers and sellers in financial institutions within the context of fixed income market. This paper, based on interviews with the senior managements and traders of 10 major financial institutions, provides an overview of information system support for traders in fixed-income trade markets

The liquidity dilemma and the repo market: a two-step policy option to address the regulatory void

A repurchase agreement (repo) is the sale of financial assets coupled with a promise to repurchase the same assets at a later date. With similar economic characteristics to secured loans and bank deposits, the repo market is one of the main sources of liquidity for financial markets and a vital segment of the US financial system. During the financial crisis of 2007-2009, when the markets crashed and the value of many assets dropped, repo lenders lost confidence in the repo market and massively withdrew their financing. Panic then ensued, drying up the liquidity in the markets. The over-reliance on short-term repo financing magnified the liquidity crunch, and financial institutions such as Lehman Brothers and Bear Stearns were brought to the brink of ruin. The crisis unveiled the deep opacity of the repo market, its proneness to runs, its structural weaknesses, the interconnectedness of its participants, the absence of stability buffers, and the lack of any comprehensive regulatory or supervisory framework. Astonishingly, however, the post-crisis regulatory agenda almost completely ignored the repo market. Though depicted as a reform intended to create a safer financial system, the Dodd-Frank Act essentially left untouched this important source of systemic risk. After outlining the repo market and shedding new light on its structural instability, this paper presents an alternative narrative of the crisis by arguing that the structurally weak repo market triggered a liquidity crunch that halted the engine of the financial system. In doing so, the paper challenges the assumption that the crisis was caused merely by over-the-counter derivatives, securitization, and too-big-to-fail institutions. This paper shows how the repo market has developed within the financial markets – free from the watchful eyes of regulators and capitalizing on regulatory arbitrage – and challenges the regulatory void of the Dodd-Frank Act vis-à-vis the repo market. Specifically, this paper presents an original two-step policy option for assessing the repo market, based on the lesson of the post-crisis reforms of over-the-counter derivatives market as well as the incremental role envisioned by lawmakers for “financial market infrastructure” and central clearing counterparties as stability mechanisms. This paper calls for the assessment of the necessity of a structural intervention in the repo market to fix the failures that currently characterize it, and suggests that more transparency, coupled with a strong financial market infrastructure, would make the repo market more transparent, stable, and resilient

Power and trust : analysis of the effects of deglobalisation and financial technology in the United Kingdom, United States and European Union

This thesis researched the effects deglobalisation and financial technology are having on the United Kingdom, United States and European Union since the 2008 Global Financial Crisis (GFC). Particular attention is paid to financial services, as it is the industry most closely related to the GFC and is central to the concept of financial technology.It begins by examining the development and dynamics of the globalised economy, defines what deglobalisation is, reviews financial crises predating the GFC and introduces the concept and history of financial technology. Analysis then focuses on the current financial regulatory landscape of the EU, UK and US. It then reviews technological developments that have occurred in the aftermath of the GFC to determine which have the greatest likelihood for adoption by the financial services industry within the next five to ten years and how they are most likely to be implemented. Particular attention is given to blockchain and smart contracts and their potential for business integration.It then assesses financial legislation passed during Trump’s tenure to determine its ramifications. The thesis concludes with analysis of the state of deglobalisation and socioeconomic conditions, especially within the UK as of 2021, the outcome of the finalised Brexit agreement for financial services and how they have affected the UK economy. This is to determine what the consequences of the period of deglobalisation from 2016 to early 2021 have ultimately meant for the US, UK and EU

Building blocks: a historical sociology of the innovation and regulation of exchange traded funds in the United States, 1970-2000

Between 1993 and 2016, the U.S. exchange traded fund (ETF) market has proliferated from one product worth $6.5 million USD to 1,455 products worth over$2 trillion USD. Despite its dramatic growth, the ETF market has yet to be the subject of sociological inquiry even though fields such as the social studies of finance have begun examining the origins of index derivatives (Millo 2007), options (MacKenzie 2006), hedge funds (Hardie and MacKenzie 2007), and foreign exchange markets (Knorr Cetina and Bruegger 2002). Thus, the purpose of this dissertation is to provide the first historical sociology of ETF innovation in the United States, using an approach inspired by the social studies of finance. This project empirically traces the emergence of the ETF by compiling an account of precursory strategies, concept development, regulatory negotiations, and early product marketing. The concept of agencement is used to frame the historical narrative of the ETF as a product of two distinct assemblages that formed in the U.S. between 1970 and 2000: first, the socio-technical integration between humans and their technologies that affected trading strategies, and second, the collaborative relationships that were formed between innovators and regulators. The mixed qualitative research consists of 36 interviews triangulated with archival records, documents sourced through Freedom of Information Act requests, private collections, and government files. Concluding analysis suggests that strategies foreshadowing the ETF began to emerge as early as the 1970s, and innovator-regulator collaborations were integral to early product qualification - a process not yet explored in literature on financial regulation

Payment, clearing and settlement systems in the CPSS countries

The Committee on Payment and Settlement Systems (CPSS) publishes””under the aegis of the Bank for International Settlements (BIS)””reference works on the payment systems and other financial market infrastructures of various countries, widely known as Red Books

Constitutional Challenges in the Algorithmic Society

The law struggles to address the constitutional challenges of the algorithmic society. This book is for scholars and lawyers interested in the intersections of law and technology. It addresses the challenges for fundamental rights and democracy, the role of policy and regulation, and the responsibilities of private actors