Trading Out of Sight: An Analysis of Cross-Trading in Mutual Fund Families

Alexander Eisele, Tamara Nefedova, Gianpaolo Parise and Kim Peijnenburg
Additional contact information
Alexander Eisele: University of Lugano
Tamara Nefedova: Université Paris-Dauphine
Gianpaolo Parise: EDHEC

No 13-19, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: This paper explores the incentives for mutual funds to trade with sibling funds affiliated with the same group. To this end, we construct a dataset of almost one million equity transactions and compare the pricing of trades crossed internally (cross-trades) with that of twin trades executed with external counterparties. We find that cross-trades are used either to opportunistically reallocate performance among trading funds or to reduce transaction costs for both counterparties. The prevalent incentive depends on the intensity of internal monitoring and the market state. We discuss the implications for the literature on fund performance and the current regulatory debate.

Keywords: Mutual fund families; Cross-trades; Performance-shifting; Monitoring; Opaque trading (search for similar items in EconPapers)
JEL-codes: G11 G23 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2013-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2023976 (application/pdf)

Related works:
Journal Article: Trading out of sight: An analysis of cross-trading in mutual fund families (2020)
Working Paper: Trading Out of Sight: An Analysis of Cross-Trading in Mutual Fund Families (2018)
Working Paper: Trading Out of Sight: An Analysis of Cross-Trading in Mutual Fund Families (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1319

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().