Secondary Market Research Articles

The Pricing of Exchange Traded Funds and the Roles of Primary and Secondary Market Participants

We study the pricing of exchange traded funds (ETFs) and the associated arbitrage trading of them in the primary and secondary markets. We find a direct relation between primary and secondary market trading that is consistent with market-makers using the primary market to hedge their inventory risk in the secondary market, as well as to facilitate arbitrage. Such trading in both markets keeps ETF prices in line with their net asset value. We conclude that the existence of the primary market enhances secondary market efficiency.

Economic Increase and Concentration of Economics Activities in Secondary Markets in Cotonou: From 2013 to 2016

Accelerating municipal revenues is very important for good decentralization. In Benin, despite the difficulties, the municipality of Cotonou is trying to put in place mechanisms to significantly improve its income. Thus, this research aims to analyze the impact of the concentration of economic activities on the increase in non-revenue taxation in the city of Cotonou specifically on secondary markets from 2013 to 2016. Results from an estimate of an ARDL model show that, in the short term, market rights and revenues from public latrines have a positive impact on non-tax revenues. The effect of place rights on the market is not significant, while revenues from the operation of public latrines have a significant impact on non-tax revenues. In the long term, the study reveals that marketing rights have a positive effect on non-tax revenues, but not in a very significant way. Revenues from the operation of public latrines, on the other hand, still have a positive impact on non-tax revenues. It is therefore urgent to find adequate answers since marketing rights and public infrastructure revenues must be the driving force behind the growth of non-tax revenues and, in turn, total revenues.

An Analysis of Attributes Impacting Consumer Online Sport Ticket Purchases in a Dual-Market Environment

Abstract: The purpose of the current study was to examine the attributes most influential in consumers’ online ticket buying experiences. Using conjoint analysis, eight scenario profiles were created in order to gauge fan preferences when purchasing sport event tickets online. Attributes included (a) timing of ticket purchase, (b) seating availability, (c) price fluctuations, (d) associated fees, (e) number of pricepoints, (f) fraud risk, and (g) price valuation assessment. Data were collected from 469 attendees at a major sport event and part worths for each attribute were calculated to determine which factors held greater importance when all seven were considered concurrently. For the sample overall, results indicated the risk of buying fraudulent tickets was far and away the most influential aspect consumers consider when purchasing sport event tickets online. Comparisons were also made based on whether tickets were purchased from the primary or secondary market, the price paid for the tickets, and the timing of ticket purchase. Results indicated consumer segmentation by these criteria result in distinct buyer profiles.

English

Abstract: Alternative funding from an external company is through an inclusion mechanism that is generally done by selling company shares to the public or often known by going public terms. If the Company already decided to take Go Public at the beginning, have to start their initial company share known as Initial Public Offering (IPO). The absence of an observable previous market price to be used as a bid determination makes the initial stock price determination at IPO very difficult. If the price of shares on the primary market (IPO) is lower than shares price on the secondary market on the first day, then there will be a phenomenon of low prices on the initial offering market, which is referred to as Underpricing. Several factors affect the Underpricing, which are Underwriter Reputation, The Age of Company, The Company Size, and Return on Asset.

Determinant of Initial Return of the Companies Doing Initial Public Offering on Indonesia Stock Exchange in 2014 - 2018

Initial return is a benefit or loss for investors because of the difference between purchased price of shares in the primary market with the selling price of the relevant shares in the secondary market. With this situation, investors can enjoy or dont get the return of the stock purchase. Thus study focus on Initial Return Positive that is benefit for investor. This study aimed to determine the effect of ROE, DER, Share Ownership, Underwriter Reputation and Firm Ages to the initial return on the IPO companies in the Indonesia Stock Exchange. Samples were selected of 55 from two sectors that list in Indonesia Stock Exchangethat that is Trade, Services & Investment and Infrastructure, Utilities & Transportation with a purposive sampling technique. The data gathered the financial statement on the IPO company prospectus in the period of 2014 to 2018. The method of analysis used in this study is linear multiple regression analysis method. Result show that Underwriter Reputation partialy has signifikan effect on Initial Return. ROE, DER Share Ownership and Firm Age have effect to Initial Return

Migrant Entrepreneurship in Spain: a Systematic Review

Introduction: Spain became an immigrant receiving country in the mid-nineties of the 20th century, when foreign workers started arriving, attracted by the booming market for unskilled labour. They traditionally entered the secondary market as employees, showing a self-employment rate lower than that of natives. However, during the economic downturn, ethnic businesses significantly increased, adopting new strategies and proving the resilience of immigrant entrepreneurs.Method: This paper aims to gather peer-reviewed literature to investigate migrant entrepreneurship in Spain, and its implications in immigrant’s performance in the labour market. Thirty-nine papers met the criteria.Results: Results show that migrant entrepreneurs: (1) respond to necessity and opportunity (2) are mainly focused on open market, rather than on ethnic business; (3) seek support in transnational practices.Discussion and/or Conclusion: Our analysis shows that Spanish migrant entrepreneurs’ behavior is not fully fitting into the classical theoretical frameworks and that in general there is a certain overlapping or a new model arising. In fact, the crisis has brought changes to ethnic minority businesses and their vulnerability with higher turnover. But it also has brought opportunities, innovation, new niches, transnational focus, and certain ease in access to property.

Do Domestic Institutional Investors (DIIs) Neutralize the Impact of Large Reversal by Foreign Institutional Investors (FIIs)? Recent Evidence from Indian Stock Market

FIIs and DIIs are the two dominant investment categories in the Indian stock market with enough clout to move the market. Inflow of FIIs is crucial for an emerging economy like India. At the outset, it attracts foreign capital to finance economic growth. Inflow of Foreign capital through FIIs is also expected to enhance liquidity in the stock market by widening the investor base and thereby improves the functioning of the secondary market. Hence, the flow of FIIs is expected to indirectly contribute to the economic growth (Lee, 2007). However, on the flip side, they are considered to be voracious, erratic investors that often profit from destabilizing financial markets of host countries. Batra (2003) observes that FPIs are considered to be driven by animal spirits rather than rational investment decisions. Hence, they have often been blamed for large reversal of capital from countries in times of crisis leading to herding behavior in other investors, particularly, domestic institutional investors (DIIs). As a result, these flows tend to make financial markets vulnerable and may end up landing the country in a crisis (Rakshit, 2006). To neuralisze the destabilizing nature of FII trading, it is critical to have powerful DIIs that would provide a cushion against this adverse effect of FIIs. However, this function of DIIs depends on the relationship between FIIs and DIIs. Therefore, the present paper attempts to understand the relationship between foreign institutional investments (FIIs) and domestic institutional investors (DIIs) in India, using the most recent high frequency data. The study finds that FIIs and DIIs follow a different trading strategy in the market. Importantly, the study shows that DIIs negatively affect the FII flows, whereas they are not affected by the FII flows. This suggests that DIIs indeed act as a cushion against the significant withdrawal by FIIs, thereby maintaining stability in the stock market.

Socio-Economic Factors as a Criterion for the Classification of Housing Markets in Selected Cities in Poland

Abstract Property prices, including, in particular, residential properties, vary across local markets. For example, according to the National Bank of Poland, in late 2018, the average unit price of an apartment on the secondary market stood at PLN 8,700 in Warsaw, 6,100 in Poznań, 4,800 in Szczecin, and 3,800 in Kielce and Zielona Góra. The level of prices on particular markets is affected by a variety of factors, primarily those of a social and economic nature. Earlier research work on the influence of such factors on the level of apartment prices was carried out on a random basis, and their results were also published in the Real Estate Management and Valuation journals (Kokot 2018). This article presents study results that help deepen and broaden such analyses, seeing as how the research work: – covers a period of 12 years (2006-2018), – proposes and then applies a city wealth synthetic measure (SMZM) in the analyses, – classifies cities according to the criterion of socio-economic factors and of average housing prices, – examines relationships within the groups of cities identified via classification. The obtained results indicate that it is justified to consider the impact of socio-economic factors on housing prices precisely in the context of their appropriate classification. Moreover, they may be an indicative tool of identifying so-called comparable or parallel real property markets.

Syndicate Structure, Primary Allocations, and Secondary Market Outcomes in Corporate Bond Offerings

We study corporate bond offerings, including underwriting syndicate structure, primary placement transactions, and secondary market outcomes. Although bond offerings rarely include “Greenshoe” options, the syndicate “overallocates” many issues, thereby attaining net short positions. Overallocations are economically substantive, facilitate the syndicate’s price stabilization efforts, and are largely offset within a few days after issuance. Secondary market liquidity is better and retail participation is higher for overallocated issues, and these issues appreciate less in the aftermarket, i.e., are less underpriced, despite syndicate purchases that temporarily support the bond price. The results indicate that the syndicate overallocates issues when uncertainty regarding secondary market order flow is high and that overallocation facilitates redistribution of the offer toward retail traders.

Public Market Players in the Private World: Implications for the Going-Public Process

AbstractWe investigate the effect of pre-IPO investments by public market institutional investors (institutions) on the exit of venture capitalists (VCs). Results indicate that institutions’ pre-IPO investments reduce IPO underpricing by mitigating VCs’ reliance on all-star analysts to boost market liquidity. We conclude that institutions facilitate VC exits in the secondary market. Supporting this view, our analysis reveals that the presence of institutions allows VCs to exit with a reduced price impact in the secondary market. Consistent with the ease of exit, VCs offer fewer shares at the IPO and are more likely to invest in institutionally backed startups.

Rental market and macroeconomics: evidence for the US

PurposeThe aim of this paper is to assess whether the inclusion of the rental housing market affect the dynamics of the real business cycles (RBCs).Design/methodology/approachFor this investigation, the authors model and estimate two dynamic stochastic general equilibrium (DSGE) versions for the US economy, one with and one without the presence of residential rent.FindingsThe findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks. The addition of this secondary housing market augments the effect of total factor productivity (TFP) shock on output and consumption. In addition, it increases the effect of the credit shock on the demand for housing. The latter highlights the role of credit for the real estate market. Therefore, the authors recommend that analysts and macro-prudential authorities consider adding it to their models.Originality/valueThe findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks.

Deciphering the Fed’s Motivations Behind Corporate Bond Purchases after COVID-19

The Federal Reserve Bank and the U.S. Treasury bought several individual corporate bonds in response to COVID-19. We show that the program purchased bonds that became highly information-sensitive due to the crisis, bonds used as collateral in the repo market by primary bond dealers, and bonds held by corporate bond funds. It did not target bonds issued by firms that were hit harder by the pandemic or firms with a large employee base. On policy announcement days, credit spreads on all corporate bonds came down significantly, but the effect was stronger for the bonds more likely to be purchased. We find no evidence that the announcements improved the equity valuations of firms with purchased bonds. Further, primary dealers from whom large amounts of bonds were bought experienced significantly higher equity returns around the policy announcement days. Overall, these findings suggest that the program relaxed the funding constraints of intermediaries and supported secondary market liquidity.

Mortgage Securitization and Shadow Bank Lending

AbstractWe show how securitization affects the size of the nonbank lending sector through a novel price-based channel. We identify the channel using a regulatory spillover shock to the cross-section of mortgage-backed security prices: the U.S. liquidity coverage ratio. The shock increases secondary market prices for FHA-insured loans by granting them favorable regulatory status once securitized. Higher prices lower nonbanks’ funding costs, prompting them to loosen lending standards and originate more FHA-insured loans. This channel accounts for 22% of nonbanks’ growth in overall mortgage market share over 2013–2015. While the shock creates risks for financial stability, homeownership also increases.

Optimal Auction Design in a Common Value Model

We study auction design when bidders have a pure common value equal to the maximum of their independent signals. In the revenue maximizing mechanism, each bidder makes a payment that is independent of his signal and the allocation discriminates in favor of bidders with lower signals. We provide a necessary and sufficient condition under which the optimal mechanism reduces to a posted price under which all bidders are equally likely to get the good. This model of pure common values can equivalently be interpreted as model of resale: the bidders have independent private values at the auction stage, and the winner of the auction can make a take-it-or-leave-it-offer in the secondary market under complete information.

Assessment of uncertainty in bid arrival times: A Bayesian mixture model

In this paper, we propose a Bayesian approach to model uncertainty in the bid arrival time by focusing on the time of the first bid in secondary (retail) market online business-to-business auctions. The proposed model is based on a Bayesian finite mixture of beta distributions. Our main objectives is to study potential heterogeneity of different auctions. In doing so, we incorporate some auction-specific features into the model and analyze their effect on the first bid time. We consider multiple competing models both in terms of fit and predictive performance. We also discuss managerial implications of the study and suggest how auctioneers can benefit from both the explanatory and predictive aspects of the model.

The difference a day makes: Timely disclosure and trading efficiency in the muni market

The Real-Time Transaction Reporting System (RTRS) reduced the delay in reporting municipal bond trades from one-day to 15 min. We find a significant reduction in secondary market trading costs after the introduction of the RTRS. Our estimates imply that retail investors benefited primarily from reduced dealer intermediation costs, while large trades benefited from reductions in bargaining costs. Bonds experienced increases in trading volume across the liquidity spectrum. We find higher dealer capital commitment, longer intermediation chains, and fewer pre-arranged trades, all suggesting increased market-making incentives for dealers. These results are largely consistent with predictions from search-based models.

Time Series Analysis of House Prices in Primary and Secondary Market in Azerbaijan

The main objective of this paper is to utilize the transformation method to turn the non-stationary time series processes into the stationary one. Being monthly in nature, the data provide information about the house prices in primary and secondary markets in Azerbaijan.

Universal Ownership in Practice: A Practical Positive Investment Framework for Asset Owners

Universal owners such as pension funds, insurance companies, university endowments, and sovereign wealth funds have an interest in the long-term health of the financial system as a whole. As COVID-19 unfortunately has demonstrated, these asset owners cannot diversify away from systemic risks such as climate change, inequality, and pandemics, and can only mitigate whole-system threats by effecting change in the real economy. The following paper examines the current state of responsible investment and its impact across asset classes and through shareholder engagement, suggesting that responsible investment in its current guise is not fit for purpose as a means to address systemic risks – particularly climate change. This is because responsible investment tends to aim to protect individual portfolios from systemic environmental and social risks, without mitigating these risks in the real economy. In contrast, universal owners’ interest is in mitigating systemic risks themselves, which would have the effect of internalising externalities and protecting the long-term health of the system as a whole. This paper proposes an evidence-based practical framework for universal owners paper that includes several measures designed to produce real-world outcomes: a more urgent and tactical version of active ownership within public equity (and even within corporate bond holdings); asset allocation within the primary market; a particular focus on assets that make the transition from the primary to the secondary market; “ungameable” metrics linked to real-world outcomes; strategic engagement with public policy and standard-setting regimes; and forward signalling to reduce wastage and accelerate decarbonisation timelines. Together these elements of the framework have the potential to change the rules of the game, alter company behaviour and fundamental strategy, reallocate capital, and bend the emissions curve permanently downwards – precisely what is required of universal owners in the year of COVID-19 recovery and during this last crucial decade of climate action.

Соотношение публичных и частных финансовых интересов при приобретении недвижимого имущества в рамках контрактной системы в сфере закупок

The article reveals the problem of the correlation of public and private financial interests in the process of acquiring apartments by state and municipal customers. The legal approaches to the solution of this problem are presented using example of arbitration practice. In order to maintain a balance of public and private financial interests within the framework of the procurement contract system, it is proposed to purchase new apartments or in the secondary market exclusively from the owners (ownership of real estate is registered), the interests of which will be represented, if necessary, by attorneys or agents.

Urban Youth Attitude toward Online Shopping: Evidence from Dhaka City

The aim of the study is to assess the attitude towards online shopping of the Urban. In this study, we have focused on only the attitude of youths towards online shopping as there were limited past studies on the youth segment. The study was conducted on the age bracket 18-35 who are generally the primary and secondary target market of the online shops. An organized and adaptive survey was conducted on 119 respondents, where convenience sampling was used. The study reveals most of the people visit online sites couple of times a week. Most of the people want to buy products up to BDT 4,000 but are willing to buy products up to BDT 5000 for branded products. So, there is a huge potential for branded products. There are more mobile banking users than bank card holders. Therefore, mobile banking can add new doors for online shopping. Most popular online products are clothing, food & beverage, mobile accessories, electronic goods and beauty products. The major distress appears to be that products delivered do not match product shown in the online shop and product’s quality. People would prefer to physically examine the products before buying it online. The study also reveals previous online buying experience and online reviews have a high influence on online buying behavior. From the study we found people think online shopping is trustworthy. Though people find online shopping convenient and think price is cheaper online but there are room for improvement.