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Informed Trading in Parallel Bond Markets

Paola Paiardini

Economics & Statistics Discussion Papers from University of Molise, Department of Economics

Abstract: In this paper we investigate the presence of asymmetric information in the parallel trading of ten-year government fixed rate bonds (BTP) on two secondary electronic platforms: the business-to-business (B2B) MTS platform and the business-to-customer (B2C) BondVision one. The two platforms are typified by a different degree of transparency. We investigate whether the probability to encounter an informed trader on the less transparent market is higher than the corresponding probability on the more transparent one. Our results show that on BondVision, that is the less transparent platform, the probability of encountering an informed trader is higher. Finally we perform a series of tests to check the robustness of our estimates. Two tests do not meet the hypothesis of independence. Nevertheless, these findings do not controvert the hypothesis of our model, but call for further analysis.

Keywords: Market microstructure; Informed trading; Parallel trading; Transparency (search for similar items in EconPapers)
JEL-codes: C51 G10 G14 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2009-09-09
New Economics Papers: this item is included in nep-cta, nep-fmk and nep-mst
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Informed trading in parallel bond markets (2015) Downloads
Working Paper: Informed Trading in Parallel Bond Markets (2009) Downloads
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