Arbitrage and Simple Financial Market Efficiency during the South Sea Bubble: A Comparative Study of the Royal African and South Sea Companies Subscription Share Issues

Subscription shares of the early 18th century were early examples of what today would be called innovated securities. Either by intent or happenstance, they served to overcome imperfections in the capital markets of the day. Not all such securities were, however, alike. The prominent examples of the subscription shares of the South Sea Company and the Royal African Company in 1720 were quiet different in their design and the corporate financial policies they were intended to aid. The historical literature emphasises the importance of irrational pricing behaviour during the South Sea Bubble, yet it is remarkable that in the financial markets of 1720 the relative values of subscription shares are easily understandable using standard financial theory.Royal African Company, South Sea Company, Financial Revolution, subscription shares, call options, derivatives, instalment receipts, innovated securities.

East India Company and Bank of England Shareholders during the South Sea Bubble: Partitions, Components and Connectivity in a Dynamic Trading Network

A new dataset, in the form of a network graph, is used to study inventory and trading behaviour amongst owners of East India Company (EIC) and Bank of England (BoE)stock around the South Sea Bubble. There was a decline in market intermediation in which the goldsmith bankers were dominant in 1720, but foreigners and Jews to some extent restored intermediation services after the Bubble. Company directors temporarily helped to sustain intermediation in 1720 itself. Whereas before and during the Bubble intermediation was largely in the form of brokerage, after the Bubble dealership noticeably began to displace brokerage.South Sea Company; Financial Revolution; social networks, financial intermediation, inventories.

Financial Market Analysis Can Go Mad (in the search for irrational behaviour during the South Sea Bubble)

An investigation into the legal and political history of South Sea Company subscription finance shows that the subscription contracts had default options built into them, as was typically the case in eighteenth-century subscription financing. Company records and contemporary pamphlet literature show that people understood the subscription finance mechanics that were stated in law. A fair presentation of South Sea share value data also supports this view. We thus conclude that the analyses published in this Review by Dale, Johnson and Tang were irretrievably flawed and present a substantially incorrect history of the markets for South Sea shares.South Sea Company, Royal African Company, Financial Revolution, Bubble Act, subscription shares, options markets.

Understanding financial derivatives during the South Sea Bubble: the case of the South Sea subscription shares

South Sea Company subscription shares were compound call options on the firm’s own original shares. From the description of shares found in 6 Geo. 1, c.4, a theory of their pricing is developed. A method for computing subscription share values is also developed. Calculated theoretical values for subscription shares are compared to the shares’ historical values and a close correspondence between the two is demonstrated. The pricing of the subscriptions appears to have been quite rational and explainable using simple financial economic theory.South Sea Company, financial revolution, bubble act, compound options, partly-paid shares.

(Re)financing the Slave Trade with the Royal African Company in the Boom Markets of 1720

In 1720, subscription finance and its attendant financial policies were highly successful for the Royal African Company. The values of subscription shares are easily understandable using standard elements of derivative security pricing theory. Sophisticated provision for protection of shareholder wealth made subscription finance successful; its parallels with modern innovated securities are demonstrated. A majority of Company shareholders participated in the re-financing, but could provide only a small portion of the new equity required. The re-financing attracted to the subscription an investment class that was strongly composed of parliamentary and aristocratic elements, but appeared to be only weakly attractive to persons who had already invested in the East India Company and was not attractive at all to Bank of England investors or to those persons who were investing in newly created marine insurance companies. Subsequent trade in subscription shares was more intense than was other share trading during the South Sea Bubble, but the trade was only lightly served by financial intermediaries. Professional financial intermediaries did not form densely connected networks of trade that were the hallmarks of Bank of England and East India Company share trading. The re-financing launched an only briefly successful revival of the Company¡¯s slave trade.South Sea Company; South Sea Bubble; goldsmith bankers; subscription shares; call options; derivatives; installment receipts; innovated securities; networks.

An Improved Canine Genome and a Comprehensive Catalogue of Coding Genes and Non-Coding Transcripts

The domestic dog, Canis familiaris, is a well-established model system for mapping trait and disease loci. While the original draft sequence was of good quality, gaps were abundant particularly in promoter regions of the genome, negatively impacting the annotation and study of candidate genes. Here, we present an improved genome build, canFam3.1, which includes 85 MB of novel sequence and now covers 99.8% of the euchromatic portion of the genome. We also present multiple RNA-Sequencing data sets from 10 different canine tissues to catalog ∼175,000 expressed loci. While about 90% of the coding genes previously annotated by EnsEMBL have measurable expression in at least one sample, the number of transcript isoforms detected by our data expands the EnsEMBL annotations by a factor of four. Syntenic comparison with the human genome revealed an additional ∼3,000 loci that are characterized as protein coding in human and were also expressed in the dog, suggesting that those were previously not annotated in the EnsEMBL canine gene set. In addition to ∼20,700 high-confidence protein coding loci, we found ∼4,600 antisense transcripts overlapping exons of protein coding genes, ∼7,200 intergenic multi-exon transcripts without coding potential, likely candidates for long intergenic non-coding RNAs (lincRNAs) and ∼11,000 transcripts were reported by two different library construction methods but did not fit any of the above categories. Of the lincRNAs, about 6,000 have no annotated orthologs in human or mouse. Functional analysis of two novel transcripts with shRNA in a mouse kidney cell line altered cell morphology and motility. All in all, we provide a much-improved annotation of the canine genome and suggest regulatory functions for several of the novel non-coding transcripts