This series of articles was authored to point out some of the often hidden, unrecognized, ignored, or forgotten assumptions underlying the functioning of markets in capitalism. Additionally, ways in which markets fail in their intended purpose also feature prominently.
Markets frequently fail, despite their pristine reputation among capitalists. One way is the many actions taken by buyers and sellers to tilt a transaction in their favor. These visible hands create asymmetries between the parties. Jason Voss, CFA, explains.
Markets are usually not systemic. Instead, from the bird’s-eye perspective of "Capitalism," many businesses are "opportunities" in the same way that it feels good to hit yourself in the head with a hammer: It's much better once you stop.
Markets are useful but imperfect, says Jason Voss, CFA. One imperfection is that they assume fungibility. Assuming that a dollar spent on one thing is equivalent to a dollar spent on something else has serious consequences for investors.
Markets assume a context entirely out of view of their participants, which can have deleterious effects for both suppliers and demanders, Jason Voss, CFA, observes in the latest installment of his Where Markets Fail series.
Markets are useful, but imperfect, Jason Voss, CFA, explains in the first installment of his Where Markets Fail series. One glaring flaw is their inability to discount the future. This results in many deleterious and often long-term consequences.
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The Financial Conduct Authority's Nausicaa Delfas said the UK and the EU must create derivatives contractual certainty after Brexit "either through an implementation period or by some other means." Delfas said, "This is an example of a situation where both sides could take unilateral approaches to dealing with the risk, but where a bilateral solution with the EU would be preferable." Futures & Options World (subscription required) (19 Jul.)
Securities and Exchange Commission Chairman Jay Clayton has instructed his staff to review whether there are opportunities to "enhance the framework for oversight" of electronic platforms that trade bonds. The action came after Democratic commissioners called for disclosure of potential conflicts of interest by those platforms. MLex (subscription required) (19 Jul.)
UK Prime Minister Theresa May is urging the EU to "evolve" its position regarding the border between the Republic of Ireland and Britain's Northern Ireland after Brexit. The EU proposal "is something I will never accept, and I believe no British prime minister could ever accept," she is expected to say in a speech scheduled for Friday. The Guardian (London) (19 Jul.)
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