The Effects of Regulating Benchmarks

Forthcoming, Economic Letters

7 Pages Posted: 27 Jun 2019

See all articles by Matteo Aquilina

Matteo Aquilina

Bank for International Settlements (BIS) - Financial Stability Board (FSB)

Andrea Pirrone

The Systemic Risk Centre, The London School of Economics and Political Science; Financial Conduct Authority

Date Written: June 21, 2019

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

JEL Classification: G14, G18, D47, D83

Suggested Citation

Aquilina, Matteo and Pirrone, Andrea, The Effects of Regulating Benchmarks (June 21, 2019). Forthcoming, Economic Letters, Available at SSRN: https://ssrn.com/abstract=3409727 or http://dx.doi.org/10.2139/ssrn.3409727

Matteo Aquilina

Bank for International Settlements (BIS) - Financial Stability Board (FSB) ( email )

Basel
Switzerland

Andrea Pirrone (Contact Author)

The Systemic Risk Centre, The London School of Economics and Political Science ( email )

Houghton St, London WC2A 2AE, United Kingdom
London, WC2A 2AE
United Kingdom

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
20
Abstract Views
300
PlumX Metrics