Credit and credit aggregates, Financial institutions, Financial markets, Financial services, Financial stability, Financial system regulation and policies, International financial markets, Lender of last resort, Market structure and pricing, Monetary policy implementation, Payment clearing and settlement systems
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May 14, 1999
Open outcry and electronic trading in futures exchanges
Despite the efficiency gains that accompany automation, most large futures exchanges have been reluctant to move away from the traditional trading floor, citing early evidence that open outcry exchanges were more liquid than electronic exchanges. More recent studies, however, suggest that electronic trading is superior to open outcry in many respects, including liquidity. In this article, the author compares the two trading systems. Although many exchanges are shifting towards electronic trading, there are still several obstacles to this transition. But as technology rapidly reduces the cost of automation and increases the demand for global 24-hour trading, a worldwide transition to electronic order-matching will likely be the next important milestone for futures exchanges. Less-automated exchanges (including the Canadian futures exchanges) will undoubtedly continue to study and promote automation in order to keep pace with technological innovations. -
Uncovering Inflation Expectations and Risk Premiums From Internationally Integrated Financial Markets
Theory and empirical evidence suggest that the term structure of interest rates reflects risk premiums as well as market expectations about future inflation and real interest rates. We propose an approach to extracting such premiums and expectations by exploiting both the comovements among interest rates across the yield curve and between two countries, Canada and […] -
An Intraday Analysis of the Effectiveness of Foreign Exchange Intervention
This paper assesses the effectiveness of Canada's official foreign exchange intervention in moderating intraday volatility of the Can$/US$ exchange rate, using a 2-1/2-year sample of 10-minute exchange rate data. The use of high frequency data (higher than daily frequency) should help in assessing the impact of intervention since the foreign exchange market is efficient and […]
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