Dramatic trading in GameStop, AMC, and other “meme stocks” has reignited debates about the efficiency of the stock market, its purposes, and whose interests it should serve. The changing role of retail investors and meme investors, a subset of retail investors involved in recent stock rallies fueled by social media, has raised urgent questions around the need for regulatory agencies to protect them.
In a recent article, I discuss the evolving role of retail investors in price discovery and the stock market. Calls for regulation usually misunderstand the role of retail investors, either dismissing them as victims of suspect … Read more
In over-the-counter (OTC) markets for assets such as currencies, derivatives, and commodities, staggering sums of money are tied to single, critical financial benchmarks. The London Interbank Offered Rate (LIBOR), for example – often referred to as “the world’s most important number” – determines interest payments on instruments ranging from student loans and mortgages to synthetic derivatives across the globe. In 2016, estimates of notional exposure to U.S. dollar LIBOR totaled about $200 trillion – 10 times U.S. GDP that year. The WM/Reuters foreign exchange benchmark is another example. Its impact extends to retirement funds and stock markets, where pension funds … Read more