Lending of Money and Shares Through the Riporti Market of the Milan Stock Exchange

16 Pages Posted: 5 Mar 2004

See all articles by Jeffrey C. Williams

Jeffrey C. Williams

University of California, Davis

Emilio Barone

Luiss - Guido Carli (Dpt. of Economics and Finance)

Date Written: January 1991

Abstract

Riporti contracts defer obligations to deliver or pay for shares from one monthly clearing to the next. Through what amount to double loans of lire against shares, the riporti market makes possible short selling and the buying of shares on credit. About 1,000 billion lire is lent monthly to long speculators by banks, brokers, or short sellers, through a dealer network and a public auction on the Exchange floor. Detailed data on one month's transactions reveal the degree of specialization and concentration among banks and brokers. Regressions with the auction's rates for six years reveal the circumstances under which short sellers pay a premium to borrow shares.

Suggested Citation

Williams, Jeffrey C. and Barone, Emilio, Lending of Money and Shares Through the Riporti Market of the Milan Stock Exchange (January 1991). Available at SSRN: https://ssrn.com/abstract=512464 or http://dx.doi.org/10.2139/ssrn.512464

Jeffrey C. Williams

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Emilio Barone (Contact Author)

Luiss - Guido Carli (Dpt. of Economics and Finance) ( email )

Viale Romania, 32
Rome, 00197
Italy

HOME PAGE: http://docenti.luiss.it/barone/

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