Faculty Digital Archive

Archive@NYU >
Stern School of Business >
Salomon Center >
Asset Management  >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/27433

Title: On the Nature of Trading: Do Speculators Leave Footprints?
Authors: Silber, William L.
Issue Date: Aug-2002
Series/Report no.: SC-AM-02-03
Abstract: The paper describes how two types of traders, marketmakers and speculators, establish their positions and manage their risk exposure. We show that balance sheets are insufficient to determine whether a trader is a marketmaker or a speculator. On the other hand, trading records describing the evolution of a position over time can identify what trading strategy was pursued. Knowing the trading strategy helps to evaluate contract compliance, risk exposure, and capital requirements of trading firms. Understanding and verifying trader behavior is especially important because leveraged trading firms, and individual traders, have traditional incentives to mask their risk-taking activities. Without proper monitoring, traders can substitute risky speculation for less risky marketmaking to reap potential payoffs.
URI: http://hdl.handle.net/2451/27433
Appears in Collections:Asset Management

Files in This Item:

File Description SizeFormat
S-AM-02-03.pdf45.11 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.

 

The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS