Download This PaperThe Effects of Regulating Benchmarks
Forthcoming, Economic Letters
7 Pages Posted: 27 Jun 2019
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: 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
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