Securities Regulation’s Liquidity Rationale

By Kevin S. Haeberle February 25, 2026 by renholding

Legal scholars have long opined on the social benefits of the core securities laws. The chief benefits of issuer-disclosure law and securities-specific fraud law identified to date relate to their positive effects on stock-price accuracy. A price-accuracy theory in support …

The Impact of Retail Investors on Stock Liquidity and Crash Risk

By Felix Hüfner and Jan-Oliver Strych December 10, 2021 by renholding

The influence of retail investors on the stock market is controversial among experts. Some studies conclude that retail investors are uninformed, overconfident investors who assess risk poorly and thus destabilize the financial markets (e.g., Grinblatt and Keloharju, 2009; Barber and …

ISS Discusses Liquidity Behavior in the S&P 500

By Henry Yegerman June 8, 2021 by renholding

As a large cap index all the constituents of the S&P 500 are highly liquid. This is certainly true compared to mid-cap or small cap stocks. There are, though, high, and low rent districts within the S&P and the most …

Liquidity, Pledgeability, and the Nature of Lending

By Douglas W. Diamond, Yunzhi Hu, and Raghuram G. Rajan March 3, 2021 by renholding

In a new paper, we explain that variation in prospective liquidity in an industry or economy prompts changes in corporate lending and banking, including changes in the level of corporate borrowing, the type of debt contracts issued, the covenants contained …

Fed to the Rescue: Unprecedented Scope, Stretched Authority

By Lev Menand April 27, 2020 by renholding

When it comes to responding to the coronavirus outbreak in the U.S., the Federal Reserve has emerged as one of the most active institutions at the national level. Its bold and timely interventions have halted a monetary breakdown that would …

Coronavirus, Systemic Risk, and Lessons from 2008

By Kathryn Judge March 16, 2020 by renholding

The greatest single-day decline in the stock market this century, widespread fear and uncertainty, shuttered schools, an end to large gatherings everywhere from NBA games to the South by Southwest festival – these are just a few of the signs …

How the SEC Modernized Regulation of Exchange-Traded Funds and the Task Ahead

By Georges Ugeux February 6, 2020 by renholding

On September 26, 2019, the SEC released the much-anticipated new rule and form amendments designed to modernize the regulation of Exchange-Traded Funds (ETFs).[1] Rule 6c-11 under the Investment Company Act permits ETFs that satisfy certain conditions to operate without …

(When) Does Transparency Reduce Liquidity?

By Karthik Balakrishnan, Aytekin Ertan and Yun Lee October 30, 2019 by renholding

The catchphrase “too much information” can be applied in many circumstances, personal and social, but not, surely, in relation to financial markets.

It has long been held that greater transparency, thus more information, can only increase the volume of trading …

The Shareholder’s Dilemma

By Adam Meirowitz and Shaoting Pi October 7, 2019 by renholding

Theoretical and empirical research on shareholder voting has provided many exciting insights and guidance for debates on policy and regulation. The default assumption, though, is that shareholders have strong incentives to vote for alternatives that they think are best for …

Institutional Shareholders: Friends or Foes of Banks?

By Emmanuel T. De George, Nayana Reiter, Christina Synn and Christopher D. Williams August 9, 2019 by renholding

Following the financial crisis, regulators, academics, and practitioners investigated the factors that contributed to the systemic failure of the financial system. An important dimension of systemic risk that was identified is the correlated movements in market prices among banks during …

The Social Functions of the Stock Market: A Primer

By Merritt B. Fox April 12, 2019 by renholding

A stock market is a key feature found in any economy with a substantial private sector. For example, in the United States, we see the New York Stock Exchange and Nasdaq, in the U.K, the London Stock Exchange, and in …

Activism Pressure and the Market for Corporate Assets

By Ulrich Hege and Yifei Zhang January 23, 2019 by renholding

The rise of shareholder activism, and its recent international expansion, have led researchers to look at many aspects of hedge fund activism. Academic papers have almost exclusively focused on the effects on firms targeted in activist campaigns. But the intense …

SEC Adopts Changes to Disclosure of Funds’ Liquidity Risk

By Securities and Exchange Commission June 29, 2018 by renholding

The Securities and Exchange Commission on June 28, 2018, adopted amendments to public liquidity-related disclosure requirements for certain open-end funds. Under the amendments, funds would discuss in their annual or semi-annual shareholder report the operation and effectiveness of their liquidity

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Cleary Gottlieb Discusses New Law Revising Dodd-Frank Act

By Derek M. Bush, Hugh C. Conroy Jr., Allison H. Breault, Zachary L. Baum and Rebecca F. Green May 30, 2018 by renholding

The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”), which became law on May 24, contains the first major package of revisions to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Act …

The Influence of Cross-Border Cooperation on Equity Market Liquidity

By Roger Silvers May 4, 2018 by renholding

In a recent post on this blog, I described how IOSCO’s Multilateral Memorandum of Understanding (MMoU)—an arrangement intended to facilitate cooperation among regulators—improved cross-border enforcement of securities laws. In this post, I summarize a follow-up study showing that this enhanced …

SEC Investment-Management Director Talks Conduct Standards and Liquidity Risk

By Dalia Blass May 2, 2018 by renholding

I am going to touch on two areas of work that reflect our efforts to be a responsive regulator that seeks engagement from all as we develop regulatory policies: the standards of conduct for investment professionals and liquidity risk management.…

Corporate Bond Trading on an Exchange

By Meni Abudy and Avi Wohl August 17, 2017 by renholding

An over-the-counter (OTC) market and an open limit order book (LOB) market are the two common mechanisms for organizing financial markets. An OTC is a decentralized market, where trades occur only through dealers. The dealers’ quotes are not fully transparent …

No Country Left Behind: History Complicates Efforts to Harmonize Global Regulation

By Hans Christensen, Christian Leuz and Luzi Hail November 7, 2016 by renholding

The European Union (EU) enacted a series of regulations in the early 2000s to improve the financial markets of member states. While the new regulations were formally the same across the EU, member countries must individually implement, supervise, and enforce …

Debevoise & Plimpton Discusses Regulatory Developments in FinTech

By David A. Luigs, Naeha Prakash, Lee A. Schneider and Liz Alspector October 18, 2016 by renholding

In this update, we review a number of recent regulatory developments that may impact firms engaged in the industry of new and innovative financial technology (“FinTech”). First, we discuss the Federal Deposit Insurance Corporation’s (“FDIC”) new guidance on examining third-party …

Morrison & Foerster discusses FDIC’s Release of Proposed Third-Party Lending Guidance

By Obrea O. Poindexter, Donald C. Lampe and Amanda J. Mollo August 18, 2016 by renholding

On July 29, 2016, the board of directors of the Federal Deposit Insurance Corporation (FDIC) released a proposal regarding third-party lending guidance (“Proposed Guidance”) as part of a package of materials designed to “improve the transparency and clarity of the …

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Columbia Law School's Blog on Corporations and the Capital Markets

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