Thesis (L.L.M.)--University of Hong Kong, 1991. / Also available in print.

Insider trading is one of the practices that (directly or indirectly) lead to a host of problems for example inaccurate stock market prices, high inflation, reduced public investor confidence, misrepresentation and non disclosure of material facts relating to securities and financial instruments. Again it reduces efficiency in the affected companies and eventually leads to economic underperformance. The researcher observed that the South African insider trading regulatory framework has some gaps and flaws which need to be adequately addressed to ensure efficient and stable financial markets. Therefore, the aim of this research is to provide a clear roadmap for an effective, efficient, adequate and internationally competitive insider trading regulatory framework in South Africa. In order to achieve the above stated aim, the historical development of the regulation insider trading is critically analyzed. The effectiveness and adequacy of the Insider Trading Act, 135 of 1998 is also discussed. Furthermore, the prohibition of insider trading under Securities Services Act, 36 of 2004 is explored and analyzed to investigate its adequacy. The role of the Financial Services Board, the Courts and the Directorate for Market Abuse is also scrutinized extensively. Moreover, a comparative analysis is undertaken of the regulation of insider trading in other jurisdictions of United States of America, Canada and Australia. This is done to investigate any lessons that can be learnt or adopted from these jurisdictions. The researcher strongly contends that having the best insider trading laws on paper alone will not cure the insider trading problem. What is required are adequate laws that are enforced effectively in South African courts. Therefore an adequate insider trading regulatory framework must be put in place to improve the efficiency of South African financial markets, to maintain a stable economy, combat misrepresentation and non disclosure of material facts in transactions relating to securities. The researcher has attempted to state the law as at 31 August 2007.

This thesis deals with the current major project of the European Central Bank named TARGET2-Securities. Its main objective is to create a single European settlement system. This responds to the current fragmented nature of the post-trade infrastructure and the increasing regulatory requirements imposed by supranational institutions for stability, security, efficiency and transparency of the European capital markets. The paper first helps to understand the topic in a broader context and presents the meaning, evolution and possibilities of the program TARGET2-Securities. The next section focuses on the access options of the Czech capital market entities. It mainly deals with settlement systems of the Central Securities Depository Prague and settlement centre SVYT at RM-SYSTEM Czech Stock Exchange. It proposes a concrete way how could the settlement participants be offered a new service using the pan-European platform. The work examines the benefits of TARGET2-Securities and applies its advantages and disadvantages to the selected market participants. The entire text is accompanied by simple diagrams, which should help readers better understand the topic.

The thesis investigates the link between internal and external funds in financing new investment when asymmetric information is important. In both chapter, the entrepreneur has private information about the value of a project and, if the quality of the project is high, she tries to signal this to outside investors. The first chapter explores the tradeoff between using internal funds and raising external funds by issuing shares or bonds to finance a project. The entrepreneur can delay the project to accumulate internal funds over time from existing operations. This allows an entrepreneur with a high quality project to reduce her reliance on expensive underpriced bond or share issues. However, accumulating funds is also costly because of discounting and the risk that the project disappears. The more valuable the good project, the less the entrepreneur will delay the project, risking its loss, and so the more she relies on external financing. When external financing is sought, the entrepreneur decides to issue bonds or shares. The greater the value of the good project, the more underpriced shares are relative to bonds. Thus an entrepreneur with a highly valuable good project chooses equity and one with a less valuable project chooses debt. Combining the two results shows that for a highly valuable good project, debt is used, and for a less valuable project, internal funds are used. External equity gets squeezed out. Aggregate data for the U.S. confirm that corporate bond issues are a more important source of funds than new share issued. Furthermore, most small firms rely on internal funds and debt, rather than external equity to finance their projects. The second chapter provides a new theory for the underpricing of initial public offerings (IPOs). As in the first chapter, underpricing is used as a signal of quality. However, the entrepreneur is risk averse and only underprices when she cannot sell enough primary (new) shares to raise sufficient proceeds from the IPO to cover the cost of the project without diluting her position below that needed to signal a high project value. Underpricing allows the entrepreneur to maintain a high stake in the firm and still make a credible signal of quality. This allows more primary shares to be sold resulting in a net increase in proceeds. The model predicts that underpricing should be greatest among firms that don't sell secondary shares (shares held by insiders) at the IPO and that there should be a positive relationship between the firm's capital requirement and the initial return among this group of firms only. A switching regression framework is used. The probit model is first estimated where the probability of no secondary shares is explained by proxies for a firm's capital requirements. The initial return is then regressed on the same proxies, conditioning on whether the firm sells secondary shares or not and accounting for possible correlation between errors in the selection and regression equations. Strong support is found for the positive relationship between initial return and capital requirements for only firms without secondary share sales, as predicted. / Arts, Faculty of / Vancouver School of Economics / Graduate

The protection of investors; a transparent, efficient and fair market; and a reduction of systemic risks are the market objectives of a prudent securities regulator. The implementation of a sound legal framework can achieve the aforementioned objectives and will put a country’s stock exchange in the prime position to function at its optimum. A well functioning stock exchange provides governments and industry with the opportunity to raise long term capital and finance new projects. The Ghanaian government, recognizing the benefits to be derived from a well functioning stock exchange, established the Ghana Stock Exchange, and promulgated legislation to govern the securities industry. In 2011 the International Monetary Fund performed an assessment of Ghana’s financial markets and identified the securities industry legislation as archaic and required amendment. The International Monetary Fund endorsed the IOSCO objectives and principles of securities regulation, by suggesting that Ghana align its securities industry laws with the IOSCO objectives and principles. IOSCO principles have been identified as one of the key standards and codes for a sound financial system and their implementation should be prioritised. Following the report by the International Monetary Fund, the Ghanaian Securities Exchange Commission announced a comprehensive review of the legislation regulating the securities industry. A draft Securities Industry Act, 2013 was prepared, and is yet to accepted by parliament and promulgated by the president. This mini-dissertation performs an assessment of the current securities industry laws against the IOSCO principles and finds that the current legal framework is not aligned with the IOSCO principles. An assessment of the proposed Securities Industry Act, 2013 against the IOSCO principles is performed and it is found that the draft bill when promulgated and implemented will bring Ghana’s securities industry laws in line with the IOSCO principles. An analysis of the securities industry laws of Nigeria and South Africa is conducted, with the aim of identifying lessons, which Ghana can learn from the aforesaid jurisdictions, whose securities industry laws are aligned with the IOSCO objectives and principles. This mini-dissertation concludes by recommending the adoption of the proposed Securities Industry Laws, 2013 by the Ghanaian parliament. It recommends that the Securities Exchange Commission adopts: Nigeria and South Africa’s methodology to enhance its financial independence and operational independence; South Africa’s risk-based system to ensure the prevention of systemic risk; aspects of South Africa and Nigeria’s methodology for the enforcement of regulations to enhance its enforcement powers; and Nigeria’s domestic remedies which have been implemented to enhance its cooperation with foreign regulators. / Dissertation (LLM)--University of Pretoria, 2014. / gm2015 / Centre for Human Rights / LLM / Unrestricted

Securities Lending is a significant part of the financial industry. One important part of the securities lending business is how to match different lending and borrowing orders to maximize profits as a middle man. However, order matching is not always as straightforward as it may seem. It is a very simple problem until you introduce the fact that some lenders and borrowers have a minimum quantity of shares for a stock they want to trade. In this paper, we have created two main algorithms that solve this problem, and one combined algorithm that uses the strengths of both algorithms. The result is that it is possible to automate the order matching process with these algorithms. With real-world data from Nordea, there is no problem using a brute force approach to solve the problem optimally in almost all cases. In the few cases where the brute force approach is too slow, a greedy approach can be used to solve the problem very quickly, even if there is a lot of orders with a minimum quantity. The trade-off is that an average error of 0.02% from the optimal solution is introduced. However, this is small enough that for most real-world applications it is better to have a good solution fast than an optimal solution slow. / Värdepapperslån är en stor del av den finansiella industrin. En stor del av att driva en verksamhet med värdepapperslån är att matcha långivare med låntagare för att maximera bankens förtjänst. Det är ett väldigt enkelt problem att lösa så länge varken långivaren eller låntagaren har några krav på ett minsta antal aktier de måste handla med. För att lösa detta problemet utvecklades två olika algoritmer. Båda algoritmerna har sina styrkor och svagheter.  BruteMatching är en algoritm där alla kombinationer av ordrar testas för att sedan välja den kombination som gav det högsta värdet. Denna algorithm körs i O(2nmin x n log n) tid. Där n är antalet ordrar och nmin är antalet ordrar med ett minimum krav. GreedyMatching är en algoritm som löser problemet först utan att ta hänsyn till om ordrarna har ett minimumkrav eller ej. Sedan kollar algoritmen om lösningen uppfylde kravet eller inte. Om lösningen inte uppfyllde kravet körs algoritmen om. Dock tas den order som inte uppfyllde kraven bort från matchningen. Den körs även om med ett nytt vilkor, att det är okej att ta med ordrar som kan skapa negativt värde så länge ett minimumkrav ej är uppfyllt. Sedan återupprepas detta tills det finns en eller två godkända lösningar och därmed väljs den som skapar det största värdet för banken. Denna algorithm körs i O(n log n + n x nmin) tid. Huvudalgoritmen som nu kommer användas i Nordeas system är en kombination av denna, där GreedyMatching körs först och om det finns misstankar om att lösningen inte är optimal så körs BruteMatching också. Dock körs bara BruteMatching om antalet ordrar med minimum krav är lägre än 20 då fler än det gör att det tar för lång tid. En utökning för algoritmerna  är att istället för att endast maximera värdet av alla ordar, ser man om det finns ett värde av att vikta om ordrarnas avgifter. Detta kan vara fördelaktigt om någon order är från en viktig kund eller om man vet att en viss order kommer att gälla under en längre tid än någon annan order.

This study examines the effects of SEC office change on regulatory oversight and firms' reporting quality. Firms are assigned to the SEC's filing review offices. However, the SEC regularly change office assignment for firms in some industries. I find that SEC oversight on newly assigned firms will be more intense. Firms are more likely to receive comment letters and there are more accountants on the filing review team. Then I provide evidence that firms improve their reporting quality after office change. Firms' financial reports are less likely to be restated and more readable. The effects start in the first year of office change and are stronger for firms with long office tenure. The SEC is more likely to be involved in newly assigned firms' restatements and asks fewer questions about severe issues in the comment letter. Overall, the results suggest that office change brings a "fresh look" benefit and leads to an increase in the intensity of SEC oversight. Firms improve their reporting quality by anticipating the increase.

In 1995 Congress passed the Private Securities Litigation Reform Act to address several perceived abuses in securities fraud class actions. In the aftermath of Enron, WorldCom, and other high profile securities litigation, critics suggest that the law made it easier for firms to escape securities fraud liability and thus created a climate conducive to fraud. Proponents maintain that the PSLRA has deterred the filing of nonmeritorious cases. This article explores whether the PSLRA achieved Congress's twin goals of "curb[ing] frivolous, lawyer-driven litigation, while preserving investors' ability to recover meritorious claims." The empirical evidence suggests that, in many respects, the PSLRA did achieve several of Congress' goals. There has been a reduction in the number of securities class actions filed. The PSLRA has improved overall case quality, particularly in the circuit with most stringent interpretation of the heightened pleading standard. In general, Congress seems to have achieved its goal of reducing the race to the court by increasing the filing delay in securities class actions. However, a stricter interpretation of the pleading standard does not affect this. The PSLRA does little to reduce the incidence of litigation for high technology issuers, but the evidence suggests that the litigation risk has substantially decreased for these issuers. Overall, the monitoring of attorney's effort increased, but institutional investors are no better at monitoring than other lead plaintiffs. The findings also suggest that lead plaintiffs forcing plaintiff's attorneys to compete for designation as lead counsel has resulted in lower attorney's fees. The observed effect is greater when the lead plaintiff is an institutional investor.

No description available.

Mortgage Backed Securities (MBS) are a type of security backed by mortgages as the underlying asset. This is achieved through a process called securitization, where specific mortgages are grouped together and separated from the bank’s other assets, and then sold to investors. One of the risks for investors in MBS is mortgage prepayments made by the borrowers of the underlying mortgages. This risk arises due to the uncertainty of the expected cash flows to be distributed among the investors. There is a correlation between falling market interest rates and an increase in prepayments. When market interest rates fall, borrowers have an incentive to refinance their mortgages at lower interest rates, leading to higher prepayment rates. The Public Securities Association (PSA) model is recognized as a standard benchmark for estimating prepayment rates in MBS. In this paper, we have introduced models to generate time points for prepayments and compare how well these models match with the PSA model. Some of these models determine the timing of each prepayment event using an exponentially distributed Poisson process, while one model employs the Gamma distribution. Additionally, we introduce a strategy where prepayment is strategically triggered by whether the market rate falls below the contract rate. In that strategy, we investigate when it is most beneficial to make a prepayment. The results show that among the models employing random generation of prepayment events, the Gamma distribution best aligns with the PSA rule. Regarding the strategic prepayment strategy, our findings suggest that it is most advantageous to make prepayments early in the mortgage term, aligning with the most rational behavior as well.