A Transaction Cost Assessment of SEC Regulation Best Interest

The U.S. Securities and Exchange Commission (“SEC”) is required to provide an economic analysis of proposed regulations and to show they plausibly meet a cost-benefit test. It recently proposed Regulation Best Interest (RBI) to replace the longstanding suitability rule for securities brokers when providing their retail clients with incidental investment advice. Despite a dearth of empirical support, the proposing release concludes that a best interest standard would better mitigate the conflicts of interest brokers face between providing their clients with impartial advice and inflating their own compensation. The empirical vacuum is a result of the SEC’s failure to ask the right economic questions, which Nobel laureate Ronald Coase raised over half a century ago: why does the rule of liability matter? What transaction costs prevent parties–who in this setting negotiate face-to-face–from correcting any market failure through private ordering? This essay provides a transaction cost assessment of RBI and concludes that a far more thorough economic analysis is necessary to justify imposing a best interest standard on retail brokers

The effect of aggregation on visibility in open water

Aggregation is a common life-history trait in open-water taxa. Qualitative understanding of how aggregation by prey influences their encounter rates with predators is critical for understanding pelagic predator-prey interactions and trophic webs.We extend a recently developed theory on underwater visibility to predict the consequences of grouping in open-water species in terms of increased visual detection of groups by predators. Our model suggests that enhanced visibility will be relatively modest, with maximum detection distance typically only doubling for a 100-fold increase in the number of prey in a group. This result suggests that although larger groups are more easily detected, this cost to aggregation will in many cases be dominated by benefits, especially through risk dilution in situations where predators cannot consume all members of a discovered group. This, in turn, helps to explain the ubiquity of grouping across a great variety of open-water taxa.PostprintPeer reviewe

A class of well-posed parabolic final value problems

This paper focuses on parabolic final value problems, and well-posedness is proved for a large class of these. The clarification is obtained from Hilbert spaces that characterise data that give existence, uniqueness and stability of the solutions. The data space is the graph normed domain of an unbounded operator that maps final states to the corresponding initial states. It induces a new compatibility condition, depending crucially on the fact that analytic semigroups always are invertible in the class of closed operators. Lax--Milgram operators in vector distribution spaces constitute the main framework. The final value heat conduction problem on a smooth open set is also proved to be well posed, and non-zero Dirichlet data are shown to require an extended compatibility condition obtained by adding an improper Bochner integral.Comment: 16 pages. To appear in "Applied and numerical harmonic analysis"; a reference update. Conference contribution, based on arXiv:1707.02136, with some further development

Registration of low-SNR high-resolution diffusion-weighted images

This paper introduces a novel, high-speed scheme for intrasubject registration and segmentation of high-resolution multi-shot diffusion-weighted images. Compared to single-shot sequences, multi-shot have advantages in terms of improved spatial resolution and reduced eddy-current and susceptibility artifacts. However, these sequences have prolonged scan times increasing the risk of subject motion, and, a lower signal to noise ratio (SNR) with smaller voxel volumes. The proposed registration algorithm comprises a hybrid thresholding expectation-maximization segmentation method that can cope with the low-SNR, and registers diffusion-weighted to B0 images through fast detection and matching of features found in edge images derived from floating and reference images. We performed validations of the entire pipeline, including assessment of visual appearance by experts, consistency error computations, and analysis of the segmentation, using volunteer images, and found its performance to be comparable with, or exceeding, that of established solutions

Does Soft Dollar Brokerage Benefit Portfolio Investors: Agency Problem or Solution?

With soft dollar brokerage, institutional portfolio managers pay brokers “premium” commission rates in exchange for rebates they use to buy third-party research. One hypothesis views this practice as a reflection of the agency problem in delegated portfolio management; another views it as a contractual solution to the agency problem that aligns the incentives of investors, managers, and brokers where direct monitoring mechanisms are inadequate. Using a database of institutional money managers, we find that premium commission payments are positively related to risk-adjusted performance, suggesting that soft dollar brokerage is a solution to agency problems. Moreover, premium commissions are positively related to management fees, suggesting that labor market competition does not punish managers for using soft dollars

The Complexity of Fixed-Height Patterned Tile Self-Assembly

We characterize the complexity of the PATS problem for patterns of fixed height and color count in variants of the model where seed glues are either chosen or fixed and identical (so-called non-uniform and uniform variants). We prove that both variants are NP-complete for patterns of height 2 or more and admit O(n)-time algorithms for patterns of height 1. We also prove that if the height and number of colors in the pattern is fixed, the non-uniform variant admits a O(n)-time algorithm while the uniform variant remains NP-complete. The NP-completeness results use a new reduction from a constrained version of a problem on finite state transducers.Comment: An abstract version appears in the proceedings of CIAA 201