Fails-to-deliver, short selling, and market quality

We investigate the collective net impact on market liquidity and pricing efficiency of equity trades that result in fails to deliver (“FTDs”). Given the nature of the US electronic trade settlement system for stocks, such “FTD trades” should originate almost exclusively from short sales, and we confirm this empirically on the basis of a natural experiment arising from a regulatory event. For a sample of 1,492 NYSE common stocks over a 42-month period from 2005 to 2008, we find that such trades lead to the same beneficial impact on liquidity and pricing efficiency as short sales that result in timely delivery. We do not find evidence that such trades are causally related to subsequent price declines or distortions, or to the failure of financial firms during the 2008 financial crisis

Naked short selling: The emperor`s new clothes?

Regulatory and media concern has focused heavily on the potentially manipulative distortion of market prices associated with naked short selling. However, naked shorting can also have beneficial effects for liquidity and pricing efficiency. We empirically investigate the impact of naked short-selling on market quality, and find that naked shorting leads to significant reduction in positive pricing errors, the volatility of stock price returns, bid-ask spreads, and pricing error volatility. We study naked shorting surrounding the demise of financial institutions hardest hit by the financial crisis in 2008 and find no evidence that stock price declines were caused by naked shorting. We also find that naked short-selling intensifies after rather than before credit downgrade announcements during the 2008 financial crisis. In general, we find that naked short sellers respond to public news and intensify their activity after price declines rather than triggering these price declines. We study the impact of the SEC ban on naked short selling of financial securities during July and August 2008, and find that the ban did not slow the price decline of those securities and had a negative impact on liquidity and pricing efficiency. Finally, after examining the speeds of mean reversion of pricing errors and order imbalances, we infer that Regulation SHO was successful in curbing the impact of manipulative naked short selling, and this reduction in the impact of manipulative naked shorting has continued through the 2008 financial crisis. Overall, our empirical results are in sharp contrast with the extremely negative preconceptions that appear to exist among media commentators and market regulators in relation to naked shortselling. --Naked Short Selling,Short Selling,Pricing Efficiency

Phytoremediation of Hazardous Radioactive Wastes

Phytoremediation technology incorporates living plants for in situ remediation of contaminated soils, sediments, tailings and groundwater. These practices integrates the removal, or degradation of toxic wastes that is capable of cleaning up an area with low to moderate levels of contamination. Phytoremediation has been studied widely for metals, pesticides, solvents, explosives, crude oil, etc. These studies and research are advanced, especially in small-scale operations. Phytoremediation has been successfully tested to decontamination of radioactive sites. The chapter initiates with possible remediation methods used for radioactive wastes where we will discuss types and nature of radioisotope contamination. Then we discuss discusses the classifications of phytoremediation techniques to treat radioactive contaminated waste. Phytoremediation performance depends on numerous factors such as soil composition, level of toxicity, suitable plant species, etc. Conversely, phytoremediation prospects low cost, practical and ecologically viable approach for low-level radiation waste clean-up

Are Short-sellers Different?

While theoretical models strongly suggest that short-sales are mainly driven by private information, recent empirical evidence of has been rather mixed. This paper contributes to the discussion by looking at various potential motives to sell short and compares these with regular buys and sales with regards to variation in the information contents and timing of short-sales. We find that short-sellers have different private information than regular buyers and sellers, which seems to have a longer life-time, being related to previous buying pressure. The information advantage of short-sellers seems originating from skilled analysis of publicly available data rather than corporate insider information. Short-sales provide an important stabilizing role by providing liquidity in periods of uninformed buying pressure. Overall, we find that short-sales are driven by multiple trade motives, which sets short-sellers apart from regular buyers and sellers.Short-selling; Information asymmetry; Microstructure

The Effect of Corporate Break-ups on Information Asymmetry: A Market Microstructure Analysis

This paper investigates the information environment during and after a corporate break-up utilizing direct measures of information asymmetry developed in the market microstructure literature. The analysis is based on all corporate break-ups in the United States in the period 1995-2005. The results document that information asymmetry declines significantly as a result of a break-up. However, this reduction takes place not at the time of its announcement or its completion, but after it has been fully consummated. At the same time, not all investors are equally affected, but informed investors who generate private information by skilled analysis of public information come to play a more important role compared to traditional corporate insiders. This might explain why financial advisors promote break-ups among their corporate clients, as they are likely beneficiaries. The positive stock-market reaction to break-up announcements is significantly related to reductions in insider-related information asymmetry, indicating that the advantage of skilled information analysts does not offset the overall improvement in the information environment due to a break-up.Spin-off, Divestiture, Information asymmetry

Informed Trading, Information Asymmetry and Pricing of Information Risk: Empirical Evidence from the NYSE

We analyze commonality in informed trading across stocks, and how informed trading varies with the structural and trading characteristics of a firm. We thereby isolate the residual level of informed trading that is unrelated to commonality, trading characteristics, and structural charac-teristics and analyze this measure with respect to its characteristics and pricing relevance. We find evidence of commonality in informed trading, and a systematic dependence of the level of informed trading on firm characteristics, such as, tick size, the existence of options, and the size of the ownership stake of outside parties. Most importantly, we find that the residual level of in-formed trading is the component of informed trading most strongly related to required returns. This indicates that an important part of the information risk premium is related to the inability to differentiate between price fluctuations that are caused by changes in fundamental value from random price moves.Market microstructure; Common factors; Risk factors; Asymmetric information

Syntheses and spectral studies of novel ciprofloxacin derivatives

Reaction of 1-cyclopropyl-6-fluoro-4-oxo-7-(piperazin-1-yl)-1,4-dihydroquinoline-3-carboxylic acid (ciprofloxacin) with thiazole/benzothiazole diazonium chloride afforded piperazine substituted ciprofloxacin derivative. The acid part of these derivatives was further condensed with various β-diketones to get 1-cyclopropyl-6-fluoro-4-oxo-7-(4-(thiazol-2-yldiazenyl)piperazin-1-yl)-1,4-dihydroquinoline-3-carboxylic acid derivatives (5a-e) and 7-(4-(benzo[d]thiazol-2-yldiazenyl)piperazin-1-yl)-1-cyclopropyl-6-fluoro-4-oxo-1,4-dihydroquinoline-3-carboxylic acid derivatives (5f-j). Structures of these compounds were established on the basis of spectral studies. KEY WORDS: Ciprofloxacin, Thiazole, Benzothiazole, β-Diketone  Bull. Chem. Soc. Ethiop. 2008, 22(3), 459-464. 

Risk Management with Derivatives by Dealers and Market Quality in Government Bond Markets

This paper examines how bond dealers use futures markets to manage the hedgeable market risk component of their core business risk exposure, and whether market quality is adversely affected by their selective risk taking activity. It also investigates the efficiency of market risk sharing within a decentralized semi-transparent market structure. We find that dealers engage in duration targeting, behaving as if they have a comparative advantage in bearing interest rate risk. They make significant directional bets often by holding futures that are in the same direction as the spot. They actively use futures to hedge changes in the spot exposure. They hedge changes in their spot exposure more when the potential costs of regulatory distress are high, when the cost of such hedging is low, and during periods of greater uncertainty. We find that duration targeting by dealers has adverse price effects due to capital constraints as predicted by Froot and Stein (1998). Finally, we find that trades in the spot market are not executed by dealers with extreme exposures. In this context, we recommend market reforms such as introduction of central quote posting or limit order book that will enable more efficient matching of liquidity demanders and suppliers, reduce trading costs, and improve the quality of risk sharing