Trade Risk Research Articles

INFORMATION CONTENT OF STOCKS IN CALL AUCTION OF SHORTER DURATION IN EMERGING MARKET

Pre-open auctions have been widely implemented across trading exchanges. Pre-open auctions tend to reduce information asymmetry and trading risks. Call auctions have been encouraged to enhance price discovery. This paper explores the shifts in information content of the pre-market auction session over time. We derive that the information content of the pre opening auction did improve little after a gap of two months. We conclude that the intraday 15 minutes realized volatility was influenced by information content in the pre-market. We demonstrate that volatility is the cause of order imbalance or a cause of poor information content. The investigation of the related volatility in the futures segment provides interesting insights on the unusual pre-market imbalances visualized on days close to expiry of futures.

Model of Electricity Trading Risk Warning under The New Power System Reform

Under the new power system reform, the scale of electricity trading market in China grows rapidly, burdening power companies with more uncertainty risk relate to market trading. This paper constructs a risk warning model for electricity trading, and take market price fluctuation as the signal of market trading risk to carry out risk warning.

International trade risks

There are a number of risks in the international trade associated with differences in the regulatory environment, logistics, geographical distance and the common misunderstanding among business partners. It would not be possible to comprehensively cover all risks because of the scale of the contribution. The paper deals the characteristics and mapping of international trade risks in the area of protection of intellectual property rights and consumer protection, as well as the processing of statistics on the occurrence of counterfeit frequency in the Czech Republic. The authors briefly described the basic concepts such as counterfeit, dangerous product, dangerous food, intellectual property rights, and international trade risks. The main part of the contribution already contains the interpretation of the achieved results. Based on the analysis and controlled interviews with practitioners, the customs procedure is described and the statistics of goods detained in the customs market both on the national market and on the EU market are processed and compared. The conclusion of the work summarizes the results and outlines possible future development of the Customs Administration of the Czech Republic.

OCCUPATIONAL RISK ANALYSIS IN AN ELECTRONIC TRADE

The study of occupational risk analysis is a technique that has been gaining ground among companies that care about the health and safety of their employees. This study has as its main objective to identify and analyze the probable risks in a trade in the Center of Manaus, in order to prevent accidents and propose improvements to make the work environment adequate for the activities. This study basically consists of three steps: visual description where it was observed through site visit; Risk identification and proposed improvements to address the problem. As a result, it was found that commerce has ergonomic and accident risks. And it was proposed safety measures and use of PPE to prevent occupational accidents.

Study on core essential elements for O2O business model with value net theory

The O2O business model concept was given based on literature review. The O2O business model framework was established and the most basic seven major elements were identified in our research with value net theory as follow: customer, telecom operator, content provider, service provider, software provider, third-party payment platform and offline business entity. Then, we identified eight secondary elements and 22 three-level elements of O2O business model with Delphi, and the O2O business model core essential elements evaluation model was also established. We analysed the model systematically and figured out top ten core elements with analytic network process as follow: network speed and stability, mining the customer subject requirements, insight to customer demand, control the trading risk, the core technology research and development, the life service payment platform, after payment platform, financial services platform development, outburst requirements fulfilment and maintenance of direct correlation among enterprises. The top ten elements mainly concentrated in four dimensions as follow: customer, telecom operators, third-party payment platform, and software providers. We hope that the research can provide enlightenment to O2O business model essence and insight to O2O future trends.

Study on core essential elements for O2O business model with value net theory

The O2O business model concept was given based on literature review. The O2O business model framework was established and the most basic seven major elements were identified in our research with value net theory as follow: customer, telecom operator, content provider, service provider, software provider, third-party payment platform and offline business entity. Then, we identified eight secondary elements and 22 three-level elements of O2O business model with Delphi, and the O2O business model core essential elements evaluation model was also established. We analysed the model systematically and figured out top ten core elements with analytic network process as follow: network speed and stability, mining the customer subject requirements, insight to customer demand, control the trading risk, the core technology research and development, the life service payment platform, after payment platform, financial services platform development, outburst requirements fulfilment and maintenance of direct correlation among enterprises. The top ten elements mainly concentrated in four dimensions as follow: customer, telecom operators, third-party payment platform, and software providers. We hope that the research can provide enlightenment to O2O business model essence and insight to O2O future trends.

Learning about Toxicity: Why Order Imbalance Can Destabilize Markets

How does a market digest order imbalance? We show that when market participants learn about the level of adverse selection (the risk of trading against better-informed counterparties) from order flow, a large order imbalance can be destabilizing, causing sharp price movements and evaporation of liquidity, as it signals high toxicity. While such effect is consistent with the practitioner view that order flow is informative about toxicity, it contrasts with standard microstructure models in which the level of adverse selection is assumed to be known and thus order imbalance improves liquidity by revealing private information. Our model helps to understand when markets are most susceptible to imbalance-induced instability and the dynamic process of how markets digest order imbalance.

Formal methods of estimating risks in trade

Risks in trade are estimated by absolute or relative level of losses. In absolute terms risk is estimated by the amount of possible loss in material, physical or value (money) term. In relative terms risk can be estimated as an amount of possible loss referred to a certain basis, for example as a property condition of the trade enterprise or total cost of resources on operation or expected profit. In this case the amount of risk is estimated as an occasional deviation of profit or proceeds of sales in direction of drop in comparison with expected values. The article shows specificity of analyzing risks in trade, which is connected with studying losses and revealing damages. The author identifies zones of risks of expected loss values and demonstrates indexes of trade enterprise risks, which should be controlled at all stages of conducting the trade and economic process. By systematizing theoretical and practical material dealing with the said topic an example was provided connected with the use of the totality of formal methods of estimating risks while shaping an optimal product range of goods in the process of distribution of limited funds to make up an order-application for purchasing goods with minimum risk.

PSY59 - ORPHAN DRUGS PRICES COMPARISON IN MIDDLE EAST NORTH AFRICA (MENA) REGION

The aim of this study was to compare annual prices of Orphan Drugs (ODs) available in five Middle East North Africa (MENA) countries: Lebanon, Morocco, Saudi Arabia, Turkey, and the United Arab Emirates (UAE). Ex-factory prices of ODs available in the 5 countries of the scope were extracted from IHS POLI database. The posology and treatment duration were used to calculate the ODs annual prices. Annual prices were adjusted using gross domestic product (GDP) per capita. Median as well as mean prices per country were calculated. The UAE had the highest number of ODs with available prices (n=42) followed by Turkey (n=28), Lebanon (n=25), Saudi Arabia (n=21), and Morocco (n=4). The UAE also had the highest median annual prices of ODs (mean=150,436$ and median=70,046$), whereas Turkey had the lowest median annual prices (mean=26,539$ and median=15,664$). Compared to the UAE, OD prices ratios varied between 0.31 (Turkey) and 0.86 (Morocco). However, adjusting prices using GDP per capita showed that the countries with the lower purchasing power, Morocco and Lebanon, had nearly four to ten times higher relative costs (14.46, 6.95 respectively) than higher GDP countries (1.86 in UAE, 1.44 in Turkey and 2.5 in Saudi Arabia). Our results confirmed the ODs affordability issue. The heterogeneity observed in OD prices within MENA countries may be explained by the difference in pricing policies (especially external price referencing) and specific countries’ economic climates. The risk of parallel trade may also drive prices higher in low GDP countries. Harmonization processes by reviewing the external price referencing and differential pricing may be potential solutions to improve the access of ODs and treatment of rare diseases in the MENA countries.

Risk and Return in High-Frequency Trading

We study performance and competition among firms engaging in high-frequency trading (HFT). We construct measures of latency and find that differences in relative latency account for large differences in HFT firms’ trading performance. HFT firms that improve their latency rank due to colocation upgrades see improved trading performance. The stronger performance associated with speed comes through both the short-lived information channel and the risk management channel, and speed is useful for various strategies, including market making and cross-market arbitrage. We find empirical support for many predictions regarding relative latency competition.

Innovative Approaches Towards the Formation of Contractual Terms within the Effective System of Risk Management in Foreign Economic Activities

The category of contractual risk is considered, which enables to effectively manage activity on the product market in the conditions of scenario uncertainty as well as to evaluate economic feasibility of legal constructions and means of the legal arsenal. In the article the importance of the system risk management in carrying out foreign economic activity is justified. The classification of risks in foreign trade is related consistently and in details. The analysis of innovative approaches towards the formation of contractual terms within the effective system of risk management is of particular interest. Incoterms 2010 was selected as a founding document in contractual terms, thus, a detailed practice of the choice of appropriate basic terms of delivery is presented. A structure of foreign trade prices and factors affecting it are provided for the justification of the selected terms. At the modern stage a system of risk management allows ensuring not only national security of the state but also enables to establish partnership relations with the participants of foreign trade activity that are based on the principle of categorizing, in accordance with which an automatic technology of categorizing the participants of foreign trade activity is developed.

World Economic Prospects Monthly

Economic OutlookVolume 42, Issue S7 p. 1-29 Article World Economic Prospects Monthly First published: 25 July 2018 https://doi.org/10.1111/1468-0319.12367AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Abstract Overview: global growth stands firm despite trade risks ▀ Protectionism worries, the weak Chinese yuan and the growing risk of a hard Brexit have clouded the economic horizon. But for now, the activity data remain resilient to these concerns. On balance, we still see global GDP expanding by a healthy 3.1% this year and 2.9% in 2019, unchanged from last month. ▀ The risk of protectionism snowballing has risen in response to President Trump's latest threat to implement tariffs on another €200bn of Chinese imports. While our baseline assumes some escalation — we have pencilled in additional US tariffs of $50bn on both Chinese and EU imports, which are reciprocated — Trump's announcement shows that the risk of an even sharper escalation remains. What is more, the recent depreciation of the CNY has raised renewed concerns about capital outflows that could trigger financial instability in China and even a liquidity shock. ▀ Meanwhile, although political events in the UK have on the face of it created a shift in favour of a ‘soft’ Brexit, parliamentary arithmetic still points to a significant chance that any such deal is voted down, resulting in an economically damaging ‘hard’ exit. ▀ But while the downside risks have risen, the global expansion remains resilient. The global composite PMI strengthened again in June and points to only a moderate growth slowdown. And in the advanced economies, there is some encouraging evidence that firms are raising capital spending despite ongoing uncertainties. Meanwhile, although China is in the eye of the protectionist storm, the possibility of more modest policy tightening and the recent strength of some of the economic data has led us to raise our GDP growth forecasts slightly for this year and next. ▀ Despite the difficult start to this year for emerging markets, we expect EM GDP growth to slow only marginally to 4.5% in 2019. China's resilience, our expectation that the CNY will not weaken much further and that the recent period of dollar strength will be reversed as US growth slows more rapidly than elsewhere are all positive for EMs. Volume42, IssueS7July 2018Pages 1-29 RelatedInformation

Rice market information transfer system (mits) in the Mekong delta, Vietnam?

MITS had an important role in farmers’ production and trade. However, MITS in the Mekong delta, Vietnam was very weak. There were lacks of good sources and channels of market information, the market information was outdated, inaccurate and inadequate. In addition, farmers’ ability and knowledge to collect, analyze and use market information were also limited. Therefore, the aims of the paper are to have a real clear picture about the current MITS in the rice value chain in the Mekong delta of Vietnam (rice farmer’s demands of rice market information, sources of rice market information, channels of rice market information, rice market information utilization and impacts of MITS on rice farmers in the Mekong delta, Vietnam). This paper gives an overview about 15 structural interviews made with 15 rice farmers in the Mekong delta, Vietnam. The findings of this study show that rice farmers in the Mekong delta, Vietnam have been accessing and using market information from formal and informal sources (Governmental agencies, traders, farmers, and mass media) via 7 main channels (Television, newspaper, radio, Internet, phone, face-to-face meetings, loudspeaker) to increase the selling prices, rice income, to decrease the risks in rice production and trade and to improve negotiation ability of farmers with traders.

Structural risk evaluation of global gas trade by a network-based dynamics simulation model

The uneven distribution of natural gas in the world makes the gas trade between countries close, and the importance of natural gas for national economies leads to a high dependence of gas-importing countries on external natural gas resources. This dependency creates a potential structural risk in the global gas trade that can spread out along trade linkages when parts of the gas trade collapse. In this paper, we developed a simulation model for the diffusion of gas trade ruptures based on a modified bootstrap percolation network model. We used this model to detect the potential gas trade risk and observed the roles of gas trade participants in the risk transmission process. In the results, we found that Norway and Qatar have the greatest impact on price fluctuations in the risk simulation. While Russia's influence ranks lower in the global gas market, although it has larger trade partners. Meanwhile, the external gas supply risk for gas-importing countries varies greatly and shows regional characteristics (European countries are in a higher trade risk environment, while China and Japan have the largest gas supply risk in Asia). We also identified the diffusion paths of gas supply breaks and found that Singapore and India are likely to serve as the largest intermediaries, causing a wide range of trade collapse.

World Economic Prospects Monthly

Overview: slowdown persists amid mounting trade risks ▀ Mounting trade tensions, along with higher oil prices, have the potential to exacerbate the ongoing global slowdown. However, we expect neither to trigger a sharp loss of economic momentum and still see only a moderate deceleration in global GDP growth. We have kept our 2018 and 2019 world GDP growth forecasts unchanged at 3.1% and 2.9% respectively, supported by US fiscal stimulus and healthy Chinese domestic demand. ▀ The US decision to impose steel and aluminium tariffs on the EU, Canada and Mexico will, on its own, have only marginal direct economic effects, but it raises the risk of a series of tit‐for‐tat action that could prove far more damaging. The worrisome outcome of the recent G7 meeting further adds to concerns that trade relations between advanced economies will get worse before they get better. Our baseline remains that a major escalation will be avoided. But the uncertainty created could well lead to weaker investment in the short term and limit the degree to which both the US and the eurozone bounce back after their disappointing starts to the year. ▀ Solid global oil demand, supply cuts in Iran and Venezuela and pipeline constraints in the US will support a firmer oil price environment in the near term. Higher energy prices will erode household discretionary incomes and weigh on consumer spending, though stronger energy sector investment is likely to provide some offset. ▀ Eurozone economic activity is slowing this year, putting downward pressure on the euro. We still the expect the euro to appreciate against the dollar over the next 18 months in response to rising US twin deficits and a narrowing in the growth differential between the US and the eurozone. In addition, we do not think recent growth readings and currency moves will affect the ECB's plan for monetary policy normalization. ▀ Risks clouding the outlook for emerging markets (EMs) have increased, with rising oil prices and tighter financial conditions coinciding with growing trade risks and less synchronised global activity. That said, we expect a weaker dollar in the medium term to alleviate pressures, which should keep EM growth supported this year.

ЛОГІСТИЧНІ ТА ВАЛЮТНІ РИЗИКИ В ДІЯЛЬНОСТІ СУБ’ЄКТІВ ЗОВНІШНЬОЇ ТОРГІВЛІ

The impact of logistics and currency risks on the selection of potential foreign contractors in the implementation of enterprises foreign trade activities has been grounded in the article. To achieve this goal, the general scientific methods of research were used (method of analysis and synthesis – to study the essence of the concept of risk interpretation; the method of comparison and statistical observations – in order to distinguish the types of risks that have the greatest impact on the stage of еру potential foreign partners activities selection and evaluation, the method of comparison – to characterize the logistics and currency risks in different countries of the world based on the statistical data analysis). The study examined the essence of the “risk” concept and the necessity of taking into account both negative and positive effects on the trade companies foreign trade activities risk, being the basis for the author’s “risks in foreign trade” definition. It is noted that currency and logistic risks when choosing partners in foreign trade activities is an important stage looking for new external counterparties. The main statistical indicators have been considered (the change of the exchange rate of the Ukrainian hryvnia against the foreign currencies of the countries of the world and the Logistics Performance Index), characterizing the level of currency and logistic risks in the countries of the world, being the basis for making a list of potential importers/exporters for specific Ukrainian business entities involved in goods export and import within searching and assessing foreign trade partners.

How the Opioid Addiction Crisis Was Rendered ‘White’

The opioid crisis and its effect on suburban and rural white populations has focused attention on socioeconomic factors. Yet the fastest rising rate of opioid deaths is in African-American communities where the response to addiction has largely been punitive.

Research on market trading risk assessment of multi-species electricity trading

The power system reform is a key step in the development of energy Internet. With the gradual advancement of the reform of power system, the forms of electricity market trading under the energy Internet are increasing. This paper studies the market transaction risk assessment and prevention of multi-species electricity trading in the context of energy internet. Firstly, in light of the basic laws of power market transactions, the violations in market transactions are analyzed. On this basis, a multi-species market trading risk assessment index system is established. Finally, risk prevention measures for multi-species transactions are proposed. The purpose is to improve the ability to identify and prevent transaction risks in the power market, form a fair and equitable market trading system, and promote the steady construction of the electricity market.

Estimating the probability distribution of the exchange rate between Ghana Cedi and American dollar

The aim of this research is to find the best probability distribution function (PDF) that fits the data on exchange rate between the Ghana Cedi and American dollar. Economic data in recent times is of much importance to many persons as well as the managers of a country as a whole. Volatilities in these data to a large extent have significant effect on the individuals and the country. The interest in exchange rate volatility by researchers can be attributed to the fact that, it is empirically difficult to predict future exchange rates precisely. The volatility of the US dollar/Ghana Cedi exchange rate is high. This has necessitated the need to have a reliable method for evaluating and minimizing the risk of trading in these currencies. Knowing the type of distribution the exchange rate between the two currencies follow will give stakeholders adequate information to prevent future shocks and loses from any volatility. The data used in this research was the monthly exchange rate between the Ghana Cedi and the American dollar from the year 2000 to 2017. From the analysis, it was observed that the data follow the lognormal distribution. Hence, this analysis has shown that the exchange rate between the Ghana Cedi and the US dollar is best modeled by the lognormal distribution. The Lognormal distribution gives a very good fit to the distribution of the Ghana Cedi and the American dollar.

Use of molecular and genomic data for disease surveillance in aquaculture: Towards improved evidence for decision making

Diagnostic tools for the identification and confirmation of animal diseases have been evolving rapidly over the last decade, with diseases of aquatic animals being no exception. Hence, case definitions used in surveillance may now include molecular and genomic components and ultimately be based on the entire genome of a pathogen. While the opportunities brought on by this change in our ability to define and differentiate organisms are manifold, there are also challenges. These include the need to consider typing tool characteristics during sampling design, but also the re-thinking of diagnostic protocols and standards for the meaningful interpretation of the increasingly complex data presented to surveillance managers. These issues are illustrated for aquaculture using the example of multi-country surveillance of antimicrobial resistance of Aeromonas spp. strains isolated from rainbow trouts (Oncorhynchus mykiss) in Europe. In order to fully exploit the opportunities of molecular and genomic information, a multi-disciplinary approach is needed to develop harmonised diagnostic procedures and modified surveillance designs for aquaculture as well as for terrestrial animal production. This will require adjustments in the relevant standards applicable to assess food safety and trade risks.