The effects of regulating benchmarks

Matteo Aquilina and F. Andrea Pirrone

Economics Letters, 2020, vol. 186, issue C

Abstract: In financial markets, dealers may take advantage of information asymmetries and extract a rent from buy-side traders. We show that an increase in the precision of a benchmark reduces noise in market prices and increases participation by overcoming traders’ and regulators’ inability to penalize dealers sufficiently.

Keywords: Benchmark; Search; Regulation (search for similar items in EconPapers)
JEL-codes: D47 D83 G14 G18 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s016517651930237x

DOI: 10.1016/j.econlet.2019.06.018

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