Trade Customs Research Articles

Customer Trading in the Foreign Exchange Market: Empirical Evidence from an Internet Trading Platform

This paper analyzes the inter-temporal relationship between currency price changes and their expectations on intra-day frequencies. We examine how price expectations are transmitted into prices by means of order flow and how order flow is affected by past prices (feedback effects). Based on a trading activity dataset from a foreign exchange electronic trading platform, OANDA FXTrade, currency price change expectations are approximated by aggregating very detailed individual order information aiming to present an accurate picture of currency price expectations. We investigate on different intra-day sampling frequencies, whether price expectations and trading patterns of the OANDA FXTrade investors are helpful for predicting future currency prices. Moreover, considering the literature on market microstructure and behaviorial finance, we formulate several hypotheses about the relationship between price changes and order flow as well as the trading behavior and the preference structure of our investors, which we investigate with the help of forecasting studies and out-of-sample prediction criteria.

The Effectiveness of Fed Intervention on the USD/DM Foreign Exchange Market

This study empirically examines the effectiveness of Fed intervention on the USD/DM exchange market using an event study approach. The event window is defined as 4 (8) days prior/post an intervention. Based on the empirical analysis, the results show that when the Fed follows an "against the wind" policy, exchange rate movements are smoothed and may switch direction. The results are robust and hold for different event window definitions and sample ranges. To test whether the results are due to the exchange rate movement itself, we conduct a simple test using customer trades by the Fed. The results do not exhibit a systematic pattern. We also find that a joint intervention has a stronger impact on the exchange rate level when the Fed buys US dollars. The policy implication of our findings is that intervention in foreign exchange markets on the part of the Fed to impact the value of the US dollar is a viable policy option.

Handbook of International Economics Law Chapter on International Trade: Regionalism

This paper, prepared as a chapter of the forthcoming Handbook of International Economic Law (Guzman & Sykes, eds.), describes the basic international legal issues raised by regionalism, including the establishment of free trade agreements and customs unions. Its focus is on the WTO law regulating the establishment of these entities.

Reliability and Price Risk Assessment of a Restructured Power System With Hybrid Market Structure

In a restructured power system with hybrid market structure, generation companies and customers trade electricity and reserve either through a centralized power pool or by bilateral contracts based on their price and reliability offers and requirements. This results in difficulty in price and reliability management of such power systems. This paper presents techniques to evaluate both reliabilities and prices for the pool and bilateral customers in a hybrid power market. In these techniques, reliability and price models for the power pool and bilateral suppliers have been developed using reliability network equivalents to easily include various agreements among market participants. Customer responses to prices are modeled using customer damage functions. The reliability and price problems with and without considering agreements are formulated using improved optimal power flow techniques based on these models. The correlation between reliabilities and prices has been considered in the techniques. The modified IEEE Reliability Test System has been analyzed to illustrate the proposed techniques.

Research Note: Customer Intimacy and Cross-Selling Strategy

Better targeting opportunities and the increasing role of information-intensive environments have created new challenges for firms in obtaining customer information. Such information can help firms increase their profits through cross-selling opportunities. However, revealing personal preferences and contact information can raise the risks for customers when dealing with a firm. Consequently, some customers trade off the benefit and risks of revealing information. As the opportunity to obtain a higher level of information increases, customers incur a higher level of risk when dealing with a firm. This increases the firm’s incentive to commit on a cross-selling level. By such a commitment, a firm can obtain customer intimacy and benefit from detailed customer information. As a result, profits increase while prices decrease. Thus, legal regulations that explicitly require firms to spell out the extent of cross-selling may actually improve the profits of the firm.

You Can't Always Get What You Want: Trade-Size Clustering and Quantity Choice in Liquidity

This paper examines whether investors care more about trading their exact quantity demands at some times than at others. Using a new data set of foreign-exchange transactions, I find that customers trade more precise quantities at quarter-end, as evidenced by less trade-size clustering. Customers trade more odd lots and fewer round lots, while the number of trades and total volume are not significantly changed. I also find that the price impact of order flow is greater when customers care more about trading precise quantities. This work sheds new light on trade-size clustering and offers a potential explanation for time-series and cross-sectional variations in common liquidity measures.

You can’t always get what you want: Trade-size clustering and quantity choice in liquidity

This paper examines whether investors care more about trading their exact quantity demands at some times than at others. Using a new data set of foreign exchange transactions, I find that customers trade more precise quantities at quarter-end, as evidenced by less trade-size clustering. Customers trade more odd lots and fewer round lots, while the number of trades and total volume are not significantly changed. I also find that the price impact of order flow is greater when customers care more about trading precise quantities. This work sheds new light on trade-size clustering and offers a potential explanation for time-series and cross-sectional variation in common liquidity measures.

Securing and Facilitating Trade Through U.S. Land Borders: Critical Analysis of C-TPAT and FAST Programs

A paradigm shift in U.S. policy about inbound commercial shipments has occurred in recent years. Before September 11, 2001, U.S. Customs Services' regulation of imported goods focused primarily on trade compliance. Since then, Customs' priority mission has become preventing terrorism against the United States. Two volunteer programs, the Customs Trade Partnership Against Terrorism (C-TPAT) and the Free and Secure Trade (FAST) initiative, were created to reconcile supply chain security and trade facilitation goals. Customs has successfully engaged thousands of companies in trade security by offering benefits such as fewer inspections and expedited border processing. However, this approach is viable only if resources and mechanisms exist to ensure that the shipments being facilitated are indeed more secure. The security practices of current C-TPAT enrollees may not be validated for months or years because of funding and staffing constraints. These limitations also prevent Customs from integrating stakeholde...

Securing and Facilitating Trade through U.S. Land Borders

A paradigm shift in U.S. policy about inbound commercial shipments has occurred in recent years. Before September 11, 2001, U.S. Customs Services’ regulation of imported goods focused primarily on trade compliance. Since then, Customs’ priority mission has become preventing terrorism against the United States. Two volunteer programs, the Customs Trade Partnership Against Terrorism (C-TPAT) and the Free and Secure Trade (FAST) initiative, were created to reconcile supply chain security and trade facilitation goals. Customs has successfully engaged thousands of companies in trade security by offering benefits such as fewer inspections and expedited border processing. However, this approach is viable only if resources and mechanisms exist to ensure that the shipments being facilitated are indeed more secure. The security practices of current C-TPAT enrollees may not be validated for months or years because of funding and staffing constraints. These limitations also prevent Customs from integrating stakeholders with crucial roles in U.S. trade into C-TPAT and FAST. To improve the ability of these initiatives to safeguard U.S. supply chains, the federal government must increase program funding levels. This will allow more prompt verification of the security of enrollees and expansion of the process to key stakeholders not currently covered under the programs. As technology improves and the number of FAST movements grows, Customs should consider mandating the use of tamper-evident technology as a prerequisite for participation in C-TPAT and FAST. Finally, additional applications for FAST transponders should be pursued to improve security, safety, and efficiency in the border-crossing process.

A Arbitragem como Modo de Inserção de Normas da Lex Mercatoria na Ordem Estatal

However, the term most frequently used in a generic sense, whether to promote the concept or to criticize it, is lex mercatoria. At the risk of adding to the confusion, and with little hope of being able to impose definitive meanings for each expression, we shall simply give the meaning attributed to each of those expressions as used hereafter. Indeed, the terminological debate is only important in so far as it facilitates discussion, on a substantive level, of the way in which the various concepts fit together. To denote rules other than those of a given jurisdiction, we shall use the generic expression lex mercatoria. The expression appears essentially in academic writing, and it covers not only transnational rules (which can only be described negatively as all rules which do not originate exclusively from a particular national legal system), but also international trade usages (meaning the practices usually followed in a particular trade). In general, we prefer the term "transnational rules" to "a-national rules" because such rules derive from the convergence of the main legal systems from which they are drawn. It is therefore counterintuitive to suggest that they have no link with national legal orders. Transnational rules in turn embrace two separate concepts: first, rules which are common to several legal systems, determined on the basis of the tronc commun method; and second, general principles of international trade law. Unitermos: arbitragem, lex mercatoria, comércio internacional.

Assessing Marketing Performance: Reasons for Metrics Selection

In recent years both practitioners and academics have shown an increasing interest in the assessment of marketing performance. This paper explores the metrics that firms select and some reasons for those choices. Our data are drawn from two UK studies. The first reports practitioner usage by the main metrics categories (consumer behaviour and intermediate, trade customer, competitor, accounting and innovativeness). The second considers which individual metrics are seen as the most important and whether that differs by sector. The role of brand equity in performance assessment and top management orientations are key considerations. We found consistency between orientation and metrics. Within these categories we identified 19 metrics that could be regarded as primary and could therefore serve as a short-list for initial selection. However, the sector importantly moderates that selection, not least because competitive benchmarking requires similar metrics to be available. Control, orientation and institutional theories appeared to influence metrics selection and the absence of agency theory is probably due to the research method of this paper. We concluded with some propositions formally to test the basis of metrics selection.

Trade liberalisation in South Asia: free trade area or customs union?*

(2003). Trade liberalisation in South Asia: free trade area or customs union?* South Asia: Journal of South Asian Studies: Vol. 26, No. 3, pp. 309-329.

Book Review: China Maritime Customs and China's Trade Statistics 1859–1948

Book Review: China Maritime Customs and China's Trade Statistics 1859–1948

The Split of the S&P 500 Futures Contract: Effects on Liquidity and Market Dynamics

The Chicago Mercantile Exchange reduced the size of its S&P 500 futures contract when it reduced the multiplier from 500 to 250 and increased the minimum tick from 0.05 to 0.10 on November 3, 1997. This is a rare major change in a very successful contract's specifications. We analyze effects of this change on liquidity and market dynamics in both a univariate and a multivariate context. The main contribution of this study is the use of multiple intervention analysis with various dynamic response functions to examine the effects of the split while taking into account several other major market events surrounding it. A multivariate analysis is also used to test the impact of the split using a structural model of liquidity and market dynamics. Empirical findings offer limited support for the hypotheses that smaller contract size resulted in smoother trading, and that more public customers trade the S&P 500 futures contract following its split. We observe a reduction in the average transaction size as well as a temporary narrowing of the bid-ask spreads, but no significant change in volatility that can be attributed to the split. We do not find any significant and lasting impact on other liquidity and market variables.

Optimal retailer's ordering policies in the EOQ model under trade credit financing

The main purpose of this note is to modify the assumption of the trade credit policy in previously published results to reflect the real-life situations. All previously published models implicitly assumed that the supplier would offer the retailer a delay period, but the retailer would not offer the trade credit period to his/her customer. In most business transactions, this assumption is debatable. In this note, we assume that the retailer also adopts the trade credit policy to stimulate his/her customer demand to develop the retailer's replenishment model. Furthermore, we assume that the retailer's trade credit period offered by supplier M is not shorter than the customer's trade credit period offered by retailer N(M⩾N). Under these conditions, we model the retailer's inventory system as a cost minimization problem to determine the retailer's optimal ordering policies. Then a theorem is developed to determine efficiently the optimal ordering policies for the retailer. We deduce some previously published results of other researchers as special cases. Finally, numerical examples are given to illustrate the theorem obtained in this note.

The norm of restaurant tipping

Using survey data, we identify a variety of factors that influence tipping behavior and in the process lay out a simple theoretical framework to help to interpret our empirical observations. We first investigate the efficiency of observed tipping behavior. While there are elements of efficiency—notably, percent tip depends on service quality—it does not appear fully efficient. We then posit a model in which customers trade off material well-being against disutility from not adhering to the norm, and we use this model to reinterpret initial empirical findings and make additional empirical predictions.

Firm market orientation and salesperson customer orientation: interpersonal and intrapersonal influences on customer service and retention in business-to-business buyer–seller relationships

The authors examine the influence of a firm's market orientation and salesperson customer orientation on buyer–seller relationships. Data from a national manufacturer's sales force and retail trade customers were used to test the influence of sales managers' perceptions on salesperson attitudes toward a firm's market orientation and its salesperson customer orientation. The impact of salesperson attitudes on customers' perceptions of service delivery and their propensity to switch suppliers was also examined. The results suggest that a firm's market orientation positively influences salesperson work attitudes. Sales managers influence salesperson customer orientation through their organizational commitment, and salesperson customer orientation influences industrial customers' switching intentions.

The effect of capital lockup and customer trade credits on the optimal lot size—a confirmation of the EPQ

The classical economic production quantity (EPQ) formula, which is obtained by balancing set-up and carrying costs, is reconsidered in this paper. Since the cost of capital tied up in stocked items is the most important part of the carrying costs, a refined approach considering different components of the capital lockup, i.e. direct labour, material, and set-up costs, is presented. Furthermore, in addition to the intensively discussed supplier trade credit, the hitherto neglected customer trade credit is introduced into the analysis. A comparison of the resulting lot-size formula and the classical one indicates that the ongoing discussion about financial refinements of the EPQ might end up at its starting point given by Harris (Oper. Res. 38 (1990) 947–50), as the classical formula can be transformed into the new one by choosing the crucial carrying cost parameter adequately. Consequently, several alternative approximations for the carrying cost parameter in the EPQ are evaluated. Scope and purpose Typically, lot-size planning takes into consideration only data from the production sector. In doing this, the interdependencies between the production and the financial sector of a firm are neglected. Consequently, a recently emerging discussion intends to overcome the separation of these two firm sectors. We extend the approaches presented up to the present date by modelling capital lockup in a more detailed way considering both the supplier and the customer trade credit as well as the time structure of the capital lockup.

Who makes markets

A dealer needs access to order flow and information to make a market profitably in a Nasdaq stock. Several variables that proxy for the stocks that an individual market maker's brokerage customers trade, including volume, location, underwriting participation and analyst coverage, are significant determinants of market making activity. Informational advantages may also factor in the market making decision as evidenced by dealers specializing in industries. These findings suggest that individual dealers have competitive advantages in making markets in specific stocks, and that potential market making competition comes from the dealers who share those advantages rather than all Nasdaq market makers.

Liquidity supply and volatility: futures market evidence

This article examines the provision of liquidity in futures markets as price volatility changes. We find that customer trading costs do not increase with volatility. However, for three of the four contracts studied, the nature of liquidity supply changes with volatility. Specifically, for relatively inactive contracts, customers as a group trade more with each other and less with market makers, on higher volatility days. By contrast, for the most active contract, trading between customers and market makers increases with volatility. We also find that market makers' income per contract decreases with volatility for one of the least active contracts in our sample, but is not significantly affected by volatility for the other contracts. These results are consistent with the idea that, for high-cost, inactive contracts, market makers react to temporary increases in volatility by raising their bid-ask spreads significantly, and customers provide increased liquidity through standing limit orders. An implication of our results is that electronic systems, where market maker participation is not required, are able to supply adequate liquidity during volatile periods. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21:1–17, 2001