Impact Of Globalization On Non Institutional Investors

This is when a product is sold into a market at a low initial price in order to generate sales before the price is increased.

Financial markets reference a platform that allows the exchange of monetary assets with securities or other entities solely, in corporate groups and also through government based groups. The financial markets mainly facilitate the transfer at low prices for the buyer but at a sufficient level for the seller, if the requests and source match (Jones 2002). Stocks are a core market in the United States and have been highly recognized for an extensive period based on the revenue they generate for the economy. The global economy caters for the buying, selling and holding of stocks by the investor and also allows for the placement of a monitoring and party capable of performing the stated transactions on behalf of the investor (Darškuvienė

In Michael Lewis’s Flash Boys, Lewis expands upon the issues related to high frequency trading, and argues that there are built in inequalities and issues in the financial markets after the emergence of regulations and technology within the stock markets and exchanges. Lewis predominantly focuses on the United States stock markets and how inequalities are being created by High Frequency Traders (also known as HFTs). The essential questions are whether High Frequency Traders are weakening the market and creating inequalities or hardships, and, if they are, who is primarily affected? Extensive research proves how high frequency trading has a negative effect on the market and potential

This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.

For Brad, the discrepancies he identified on his trading platform allowed him to rally behind a possible solution in the form of the Thor framework. Even with its proven successes, Lewis points out that Thor is yet to receive widespread uptake and thereby stands a risk of discontinuation regardless of its potential benefits. Should the platform fail, the justice system will have played a part in dooming the economy to continued over-speculation, and massive losses in consumer confidence as risks continue to spread unevenly across industry players. Such an environment also poses the risk of future bailouts is any of these dominant trading companies makes significant losses in any of its investments. Regulatory measures should also make HFTs illegal due to their destabilizing effect, thereby helping to avoid the fallout that resulted from the ballooning of failed investment options in previous years. These measures will make the financial markets a less confusing environment to navigate, thereby enhancing investor confidence, and reducing the possibility of a recurrence of this trend in the

The idea of institutional herding has a striking implication for security price volatility. Estimations from the essay ‘Sending the Herd Off the Cliff Edge’suggests that the predominance of herding behavior may explain why the financial system in 1990s had been in crisis for 40 out of the 120 months or 33% of the time (Persaud, 2000). These concerns, along with the increasing stock market ownership of institution investor in comparison to individual investors, is often used as a basis for advocating for an increase in monitoring institutional trading in equity markets in hopes that it that would lead to a reduction in the dominance of institutional investors in the financial market. However such claims are not fully supported by empirical research in the literature. Two schools of thoughts emerge the first being that herding enhances pricing efficiency, and second ascertains that herding initiates short-term trend reversals.

Institutions often trade of shares and institutional order’s can have a major impact on market volatility. In smaller markets, institutional trades can potentially destabilize the markets. Moreover, institutions also have to design and time their trading strategies carefully so that their trades have maximum possible

When thinking about financial institutions and how I can implement what I had learned, the first topic that came to mind was stocks, bond, wall street. The thought that there is a lot of money that can be made there peaked my interest ergo, this book written by Peter Lynch was intriguing. Because the amount of knowledge I know about Wall Street is insignificant, the understandings and experience of Mr. Lynch have been useful in my endeavors to acknowledge the rules that make up the trading rooms and actions people make in order to stay ahead of the market. Though this book covers just one opinion of many in the end, his expertise will only benefit partially

Fortunately, many places in the world are covered with people who posses tons of possessions. From cellphones, to computers, different types of attire clothes, vehicles, furniture, electrical machinery, plastics, footwear and much more, China is one of the most largest goods exporting countries in the world. Have you ever look at the bottom of any particular item you own and saw the three words of “Made In China” on the majority of those items? China is a very large manufacturing piece of land that exports the many items that we see and posses in our country of the United States. Due to trades, imports, exports and agreements, Globalization, which is the process where businesses, industries and organizations develop the international

Use of HFT has grown exponentially since the 1990’s. In 2012 alone, 6.4 billion shares were traded through some type of HFT. There are signs, though, that the growth of HFT is tapering off. Profits from HFT in 2014 are estimated at 1.25 billion dollars, down 74% from its 2009 peak of 4.9 billion. Nevertheless, it is still an integral part of the US Stock Market.

According to statistics from Bank of Japan, HFT account for more than 50 percent in Tokyo Stock Exchange (TSE) in September 2012, which is the second largest sock exchange in Asia. Rather than attempting to restrict HFT in the market, Japan has made upgrades to its trading system “Arrowhead” to embrace HFT. “Arrowhead” brings millisecond-level speeds to both transactions and market-information distribution, achieves an order execution time of 5 milliseconds and distributes information in 3 milliseconds5. It also distributes all order information on all issues in real time. High frequency traders could get benefit from this real-time access to all order and quote data. In addition, Japan stock market is the

In recent years, computerized trading has dramatically altered in financial market. High frequency trading (HFT), a type of algorithmic trading, can make significant profits within microseconds. Increasing competition between securities companies and ever-advancing technology has allowed high frequency trading to dominate global financial market. About 10 to 70 percent of the order volume in stock and derivatives trading are based on HFT. (Lattemann, 2012). There has been considerable debate about whether HFT is advantageous or disadvantageous to financial systems. This essay will evaluate the two positions and attempt to offer solutions to the problems of HFT which are focused on seven impacts: liquidity, volatility, price discovery,

This chapter gives a brief introduction to hedge funds and hedge fund data. Hedge funds are generally considered as private investment vehicles for wealthy individual and institutional investors. According to the National Securities Markets Improvement Act of 1996, participators are limited to at most 500 ‘qualified investors’, individuals who have at least $5 Million to invest in hedge funds and institutional investors with capital of at least $25 Million (Brown and Goetzmann, 2001). Normally, hedge funds are organized as limited partnerships, in which individual and institutional investors are limited partners and the hedge fund managers are general partners (Fung and Hsieh, 1999). To ensure the common economic benefit for investors and managers, hedge fund managers usually take a portion of their own wealth to invest in the funds. The fees charged by the investors consist of the fixed management fee and performance-based fee. The performance-based fee, which is significantly higher than fixed management fee, is paid to successful hedge fund managers. Although hedge funds influence the market dramatically, little about what they really do is understood publicly. Brown and Goetzmann (2001) state that the term ‘hedge fund’ seems to imply market neutral and low risk trading strategies, whereas hedge funds appear to have a high level of risk because of the extensive use of leverage.

Institutional investors are any organizations or persons which collect quite number sums of money to invest in securities and also control a collection of share amounts to qualify for special treatment and less regulation. They can also include operating companies that decide to invest their profits to some degree in these types of assets. Insurance companies, mutual funds and pension funds are some examples of institutional investors. These institutional investors need to face some regulations. “Institutional investors always participate in private placements of securities due to their sophistication, in which certain aspects of the securities laws may be inapplicable.”

In regards to liquidity detection by HFTs, funds have also begun to not trade in large open markets when they know it 's difficult to hide large positions, preferably instead in using "dark pools" - an off exchange platform operated by brokers. But this method would cause funds not to have the best bid ask