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10 Chasing a Chimera? The role of the efficient market hypothesis In previous chapters, the focus was on the various methodologies for determining value, noting the disadvantages in some of the important and relevant methods used. They often involved complex mathematical models in an environment in which it was believed that it was possible to find certainty. The efficient market hypothesis (EMH) prevailed. Capital markets are efficient, because competition between profit-seeking market participants will ensure that the
209 were registered subsidiaries, in twenty-one countries. Its collapse resulted in over 75 separate and distinct bankruptcy proceedings immediately, and affected thousands of financial market participants through its wide range of contracts. These included mortgage banks for whole residential mortgage loans; other banks/dealers for market making, firm finance, OTC derivatives; hedge funds for prime brokerage, custody, trade finance, OTC derivatives, secondary trading and MBSs and CMBSs; sovereign and municipal debt issuers for credit and interest rate derivatives
This chapter sketches out the contours of econocracy, its relationship with the academic discipline of economics and how it has developed in the twentieth century. It then shows in more detail how democracy has been undermined and the idea of the citizen as an active participant in political discussion and collective decision making been lost.
of regulatory reforms following the financial crisis. After the discovery of the manipulation of benchmarks, in particular the LIBOR and the FX benchmarks, the G20 asked the FSB to undertake a ‘fundamental review of major interest rate benchmarks and plans for reform to ensure that those plans are consistent and coordinated and that interest rate benchmarks are robust and appropriately used by market participants’.2 The first step was taken in July 2013 with the establishment of an Official Sector Steering Group, consisting of senior officials from central banks
Deutsche Bank’s decision to withdraw. Before then, three banks provided the Fix: Deutsche Bank, which had acquired Sharps Pixley; Scotia Bank, which had acquired Mocatta & Goldsmid; and HSBC, which had acquired Samuel Montagu. The chair was rotated through the membership. All participants, including Gold and silver fixing193 the members’ clients, would put their orders through the three fixing members once the price was fixed. Clients ranged broadly, from silver producers, through miners, refiners, industrialists, jewellers, investors, speculators, private
interests of its clients, other market participants and the wider UK financial system. Similar failings occurred in other areas of Barclays’ FX voice trading in London, including various transactions in currencies of countries in emerging markets and the G10. What did Barclays do by way of manipulation? • It made attempts to manipulate the WM Reuters and the ECB fix rates, in collusion with traders at other firms, for Barclays’ own benefit and to the potential detriment of its clients and of other market participants. • It attempted to trigger clients’ stop loss orders
fair value measurements. The definition of ‘fair value’ retains the concept of ‘exchange price’ found in the earlier definitions, but clarifies it. ‘The exchange price is the price that an orderly transaction between market participants to sell the assets or transfer the liability in the market in which the reporting entity would transact for the asset or the liability, that is, the principal or the most advantageous market for the asset or liability.’ 19 Fair value is a market-based measurement, which should be assessed based on the assumptions that market
’ Association (BBA), the trade body. From 1984 onwards, the data compilation and calculation were undertaken by Reuters for the BBA and the process was overseen by an independent committee of market participants, the Foreign Exchange and Money Market Committee. The membership of the Committee included corporate treasurers and representatives from banks, the money market and exchanges. It is important to understand the way in which LIBOR was calculated in order to see how it was manipulated in later years. LIBOR was calculated as a ‘trimmed’ average of statistics submitted by
, with the euro remaining at 37% and the yen at around 20%. Banking mergers led to a reduction in the number of market participants, as consolidation continued. For example, in the USA, the number of banks accounting for 75% of the foreign exchange market was only 11 in 2004, compared with 13 in 2001, and 20 in 1998 and 1995. In the UK, 16 banks accounted for 75% of the foreign exchange market in 2004, compared with 17 in 2001, 24 in 1998 and 20 in 1995. The BIS notes that the reporting banks covered by the turnover part of the Triennial Survey are individual offices
subscribers. The starting point for most sub-Saharan Africans using internet content is very everyday. A male Rwandan focus group participant in 2017 recalled that it was his interest in the European Champions League as well as in communicating with friends. 69 But once they started, it became ‘a veritable tool for news, social interactions, education, business, online shopping, funds transfer, career building, among others’. 70 A female Ugandan research