Financial Markets Beyond Stock Exchanges

Most of the literature on financial markets deals with centralized, extremely liquid markets, such as stock exchanges, but 90% of financial assets across the world, including most of the fixed-income instruments issued by sovereigns, municipals, and corporates, trade in decentralized, Over-the-Counter (OTC) markets.

In OTC markets, there is no centralized marketplace, investors need to search for counterparties that are willing to trade, and liquidity is very limited.

Florian Nagler, Assistant Professor at Bocconi Department of Finance, obtained a €X.Ymln ERC Starting Grant from the European Research Council (ERC) to better understand the workings of OTC markets. In particular, he wants to explain the existence of non-traded assets (NTAs). In the US corporate bond market, for instance, 60% of assets do not trade on a daily basis, 25% of assets do not trade on a monthly basis, and 10% of assets never trade.

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Видео Financial Markets Beyond Stock Exchanges канала Bocconi University