Benchmark Competition

Over-the-counter (OTC) markets—those for currencies, derivatives, swaps, bonds, commodities—make up an immense and critical component of global financial markets. Certain benchmarks, such as the London Interbank Offered Rate (LIBOR), are hardwired throughout these markets and play crucial roles in pricing and valuation. For example, interest payments on instruments ranging from student loans and mortgages to synthetic derivatives are tied to the value of LIBOR. In 2016, estimates of notional exposure to U.S. dollar LIBOR totaled about $200 trillion—ten times U.S. GDP that year. Correspondingly, miniscule variations in a benchmark’s value will impact vast numbers of assets and transactions for hundreds of millions of people. These benchmarks have become so ubiquitous for an important reason: they have introduced substantial harmonization effects in otherwise decentralized, opaque dealer markets. These benefits fit within the prevailing view of financial regulation: because sophisticated market participants, through wealth-maximizing behavior, tend to select towards structures that maximize efficiency, in aggregate social welfare is maximized, meaning that observed equilibria are likely the most efficient equilibria. And thus, OTC markets have remained largely unregulated for decades. This Article argues that this understanding is incomplete, and identifies a fundamental misalignment between what is privately optimal and what is socially optimal in OTC markets. By undertaking a novel structural analysis, the Article documents overreliance by market participants on benchmarks even when they are substantially suboptimal. Thus, in contrast to existing reform proposals, which overwhelmingly assume that a single benchmark will continue to dominate, this Article proposes an alternative competitive equilibrium—one where multiple benchmarks compete

Distributed Ledger Technology and the Securities Markets of the Future: A Stakeholder Survey

This Article evaluates the implications of distributed ledger technology (DLT) for the securities markets of the future and their regulation. DLT is an integral part of the larger revolution in computing, communication and data storage capacity that has transformed securities markets over the last few decades and promises further radical change in the years to come. The potential of DLT, if it can be realized, could improve the functioning of our securities markets while at the same time sharply reducing costs. Based on an interview survey of about 100 persons who play prominent roles in actually making these markets work or in regulating them, this Article reports on the most important topics and themes that have emerged from the wide range of interviewees’ opinions about the extent to which DLT will affect the future of securities markets and their regulation. A significant number saw the potential for DLT to transform securities markets and market structure, from the possibility of stock trading on DLT to the potential impact on intermediaries, the ordinary retail investor, and on preventing wrongdoing in the stock market. However, key questions remain about implementation and the appetite for making DLT-based changes among both market participants and regulators

Spoofing and its Regulation

Nearly a century after the United States enacted its first securities laws, urgent questions remain as to the scope of manipulation law: whether manipulation is possible in principle, and if so, how the law should respond in practice. Sharp disagreement among courts, economists, and legal scholars as to whether trading or quoting activity constitutes illegal manipulation has led to a legal framework that lacks precision and cogency. Moreover, the poorly articulated normative basis for court rulings has resulted in enforcement that is both under-inclusive and over-inclusive in ways that do a poor job of discouraging socially harmful transactions and enabling socially beneficial ones.  This Article seeks to clarify this confusion. Drawing on microstructure and financial economics, this Article offers a new understanding of a common kind of quote-driven manipulation, often referred to as “spoofing.” By employing an analytical and normative framework developed previously by two of the authors in assessing another major form of manipulation, trade-driven manipulation, this Article assesses the impact of spoofing on what occurs in the securities markets and carefully evaluates its effects on social welfare and economic efficiency. The result is a new understanding of quote-based manipulation that helps resolve essential questions in manipulation law and provides guidance for future regulation and enforcement.

Aerodynamic roughness parameters in cities: inclusion of vegetation

A widely used morphometric method (Macdonald et al. 1998) to calculate the zero-plane displacement (zd) and aerodynamic roughness length (z0) for momentum is further developed to include vegetation. The adaptation also applies to the Kanda et al. (2013) morphometric method which considers roughness-element height variability. Roughness-element heights (mean, maximum and standard deviation) of both buildings and vegetation are combined with a porosity corrected plan area and drag formulation. The method captures the influence of vegetation (in addition to buildings), with the magnitude of the effect depending upon whether buildings or vegetation are dominant and the porosity of vegetation (e.g. leaf-on or leaf-off state). Application to five urban areas demonstrates that where vegetation is taller and has larger surface cover, its inclusion in the morphometric methods can be more important than the morphometric method used. Implications for modelling the logarithmic wind profile (to 100 m) are demonstrated. Where vegetation is taller and occupies a greater amount of space, wind speeds may be slowed by up to a factor of three

Enhanced In Vitro Refolding of Fibroblast Growth Factor 15 with the Assistance of SUMO Fusion Partner

Fibroblast growth factor 15 (Fgf15) is the mouse orthologue of human FGF19. Fgf15 is highly expressed in the ileum and functions as an endocrine signal to regulate liver function, including bile acid synthesis, hepatocyte proliferation and insulin sensitivity. In order to fully understand the function of Fgf15, methods are needed to produce pure Fgf15 protein in the prokaryotic system. However, when expressed in Escherichia coli (E. coli), the recombinant Fgf15 protein was insoluble and found only in inclusion bodies. In the current study, we report a method to produce recombinant Fgf15 protein in E. coli through the use of small ubiquitin-related modifier (SUMO) fusion tag. Even though the SUMO has been shown to strongly improve protein solubility and expression levels, our studies suggest that the SUMO does not improve Fgf15 protein solubility. Instead, proper refolding of Fgf15 protein was achieved when Fgf15 was expressed as a partner protein of the fusion tag SUMO, followed by in vitro dialysis refolding. After refolding, the N-terminal SUMO tag was cleaved from the recombinant Fgf15 fusion protein by ScUlp1 (Ubiquitin-Like Protein-Specific Protease 1 from S. cerevisiae). With or without the SUMO tag, the refolded Fgf15 protein was biologically active, as revealed by its ability to reduce hepatic Cyp7a1 mRNA levels in mice. In addition, recombinant Fgf15 protein suppressed Cyp7a1 mRNA levels in a dose-dependent manner. In summary, we have developed a successful method to express functional Fgf15 protein in prokaryotic cells

Microangiopathy in the cerebellum of patients with mitochondrial DNA disease

Neuropathological findings in mitochondrial DNA disease vary and are often dependent on the type of mitochondrial DNA defect. Many reports document neuronal cell loss, demyelination, gliosis and necrotic lesions in post-mortem material. However, previous studies highlight vascular abnormalities in patients harbouring mitochondrial DNA defects, particularly in those with the m.3243A>G mutation in whom stroke-like events are part of the mitochondrial encephalopathy lactic acidosis and stroke-like episodes syndrome. We investigated microangiopathic changes in the cerebellum of 16 genetically and clinically well-defined patients. Respiratory chain deficiency, high levels of mutated mitochondrial DNA and increased mitochondrial mass were present within the smooth muscle cells and endothelial cells comprising the vessel wall in patients. These changes were not limited to those harbouring the m.3243A>G mutation frequently associated with mitochondrial encephalopathy, lactic acidosis and stroke-like episodes, but were documented in patients harbouring m.8344A>G and autosomal recessive polymerase (DNA directed), gamma (POLG) mutations. In 8 of the 16 patients, multiple ischaemic-like lesions occurred in the cerebellar cortex suggestive of vascular smooth muscle cell dysfunction. Indeed, changes in vascular smooth muscle and endothelium distribution and cell size are indicative of vascular cell loss. We found evidence of blood–brain barrier breakdown characterized by plasma protein extravasation following fibrinogen and IgG immunohistochemistry. Reduced immunofluorescence was also observed using markers for endothelial tight junctions providing further evidence in support of blood–brain barrier breakdown. Understanding the structural and functional changes occurring in central nervous system microvessels in patients harbouring mitochondrial DNA defects will provide an important insight into mechanisms of neurodegeneration in mitochondrial DNA disease. Since therapeutic strategies targeting the central nervous system are limited, modulating vascular function presents an exciting opportunity to lessen the burden of disease in these patients

A 6-Month Open-Label Study of Vortioxetine among Cancer Patients with Major Depressive Disorder (MDD)

Objective: Vortioxetine is a monoaminergic drug with a novel multimodal mechanism of action. We investigated its efficacy on depressive symptoms, cognitive function, and quality of life among cancer patients.Methods: In this multicenter, open-label, single-arm, observational study, patients received flexible doses of Vortioxetine for a period of six months. All participants were assessed at baseline and scheduled for monitoring at weeks 2, 4, 8, 12, 16, 20, and 24. Depression severity was assessed using Montgomery-Asberg Depression Rating Scale (MADRS) and the Clinical Global Impression (CGI) scale. The Perceived Deficiency Questionnaire (PDQ-5) assessed the perceived cognitive difficulties in concentration, executive functioning, and memory. The European Organization for the Research and Treatment of Cancer Quality of Life Questionnaire (EORTC) was used to assess the patients’ quality of life. Side effects of vortioxetine were monitored using the Antidepressant Side-Effect Checklist (ASEC). Results: Patients experienced a reduction in MADRS scores from 29.89 ± 5.997 at baseline to 11.59 ± 4.629 by Week 24. The PDQ-5 scores showed significant change from Week-4, whereas the EORTC role, emotional, and cognitive functioning scores showed a significant change from Week 2 onwards. CGI-Severity scores decreased from a baseline of 4.39 ± 0.746 to 2.41 ± 1.085 by Week 24. During the 24-Weeks of therapy, around three-quarters of the patients (73.3%) had one or more adverse events reported on the ASEC. The most frequently reported TEAEs were dry mouth, insomnia, somnolence, and headache, with more than a 30% incidence rate. Conclusion: Vortioxetine seems promising in the management of depression and enhancement of cognitive function and quality of life of cancer patients with Major Depressive Disorder