Tag: Financial Markets
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Miscellaneous: Commodities Trading; Venture Capital, etc.
[Posted by Umakanth Varottil] 1. Commodities Futures Trading A few papers and columns have recently appeared in this area. In a paper titled Futures Trading in Agricultural Commodities, Sandhya Srinivasan finds that the ban on futures trading on 4 agricultural commodities in May this year has not been effecting in bringing down the price of…
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Bulk Deals and Order Matching
[Posted by Umakanth Varottil] The availability of income tax exemptions (on long term capital gains) for share transactions that are executed through stock exchanges have caused otherwise negotiated share sale and purchase deals to be implemented through the stock exchange mechanism. This would require parties to bear only the securities transaction tax (STT) at rates…
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Some Lessons from Bear Stearns
[Posted by Umakanth Varottil] The New York Times DealProfessor has a column Burying Bear Stearns that highlights the takeaways from the Bear Stearns saga, which incidentally are matters we often endeavour to stress on this blog. They are: – Moral hazard– Systemic risk– Corporate governance
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Regulating Hedge Funds
[Posted by Umakanth Varottil] I have uploaded an abstract of a working paper titled Analysing India’s Approach to Hedge Fund Regulation on SSRN, which is reproduced below: “Hedge funds tend to employ aggressive investment strategies, and they highly leverage their funds. While hedge funds infuse liquidity into the financial markets and enhance market efficiency, they…
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Disclosures in Complex Transactions
[Posted by Umakanth Varottil] With increasing complexity in transactions entered into by companies, especially in the financial sector, there is the lingering question of how these transactions are to be meaningfully disclosed to shareholders of the companies so as to enable them to take an investment decision (such as to buy, sell, hold, etc.). The…
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Role of Law and Politics in India’s Economic Growth
[Posted by Umakanth Varottil] There is a recent paper titled “Law, Finance, and Politics: The Case of India” by John Armour and Priya Lele that has been posted on SSRN. The authors join the debate as to whether a country’s legal origins (e.g. common law or civil law) necessarily have an impact on the extent…
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More on the Indian Derivatives Saga
[Posted by Umakanth Varottil] While the legalities of several derivative transactions entered into between banks and corporates are pending consideration of courts, it appears that these matters have ended up in court in the first place because of unexpected market movements over the last few months which defied all prior indications and past market history.…
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Accounting for Derivatives Exposure
[Posted by Umakanth Varottil] A recent announcement by the Institute of Chartered Accounts of India (ICAI) has added to the imbroglio over derivatives. Accounting Standard 30 (AS30) that deals with accounting for derivatives was to become mandatory with effect from April 1, 2011. However, the ICAI in an emergent decision has called for an early…
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Improving Stock Sales Practices of Intermediaries
[Posted by Umakanth Varottil] Stock intermediaries around the world, such as brokers and sub-brokers, who recommend and sell securities to clients, are regulated by the securities regulatory agencies of the countries where they operate as well as the stock exchanges of which they are members. However, the stock intermediation industry has been facing several problems…
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Inadequacies of the FII Regime
[Posted by Umakanth Varottil] One of our guest contributors, Somasekhar Sundaresan, has a well-argued column in the Business Standard in which he calls for an overhaul of the regulations that govern foreign institutional investors (FIIs) in India. Here it is: The regulatory regime for foreign institutional investors (FIIs) is the Indian capital market’s window to…