Is there evidence of insider trading in Australian water markets?

Simon de Bonviller, Alec Zuo and Sarah Wheeler

Australian Journal of Agricultural and Resource Economics, 2019, vol. 60, issue 2

Abstract: Insider trading is a much studied form of market manipulation in the financial market literature. However, studies addressing the issue of insider trading in resource markets, and in particular water markets, are rare. This study investigates the occurrence of insider trading practices around important water market allocation announcements in the Goulburn temporary water market trading zone in the Murray–Darling Basin, Australia, which is one of the largest and longest operating water market districts in the world. Nine years of daily water allocation volume and price transactions between 2008 and 2017 are modelled, with some evidence found of abnormal price movements in the 3 or 5 days preceding water allocation announcements, and especially before the introduction of insider trading rules in 2014. However, although the results do suggest some very weak statistically significant evidence that insider trading may still be present in Goulburn water markets post-2014, it is just as feasible that our results may also reflect an increased sophistication of trader behaviour over time.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Journal Article: Is there evidence of insider trading in Australian water markets? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aareaj:333771

DOI: 10.22004/ag.econ.333771

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