Asymmetries in Short Selling of Exchange-Traded Funds and the Potential for Systemic Risk

CFA Digest ◽  
2012 ◽  
Vol 42 (3) ◽  
pp. 146-148
Author(s):  
Claire Emory
Keyword(s):  
Systemic Risk ◽  
Short Selling ◽  
Exchange Traded Funds

Asymmetries in Short Selling of Exchange-Traded Funds and the Potential for Systemic Risk

2012 ◽  
pp. 120203040703006 ◽  
Author(s):  
Andrew A Bogan ◽  
Brendan Connor ◽  
Thomas R Bogan ◽  
Elizabeth C Bogan
Keyword(s):  
Systemic Risk ◽  
Short Selling ◽  
Exchange Traded Funds

Asymmetries in Short Selling of Exchange-Traded Fundsand the Potential for Systemic Risk

2012 ◽  
Vol 2 (4) ◽  
pp. 74-83
Author(s):  
Andrew A. Bogan ◽  
Brendan Connor ◽  
Thomas R. Bogan ◽  
Elizabeth C. Bogan
Keyword(s):  
Systemic Risk ◽  
Short Selling

scholarly journals Short selling and exchange-traded funds returns: evidence from the London Stock Exchange

2015 ◽  
Vol 48 (2) ◽  
pp. 152-164 ◽  
Author(s):  
Azhar Mohamad ◽  
Aziz Jaafar ◽  
John Goddard
Keyword(s):  
Stock Exchange ◽  
Short Selling ◽  
Exchange Traded Funds ◽  
London Stock Exchange

The Growth and Changing Role of Passive Investments: A Critical Perspective on Index Mutual Funds and Exchange Traded Funds

2016 ◽  
Vol 28 (6) ◽  
Author(s):  
Wolfgang Bessler ◽  
Heinz J. Hockmann
Keyword(s):  
Corporate Governance ◽  
Mutual Funds ◽  
Systemic Risk ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Securities Market ◽  
Market Quality ◽  
Exchange Traded Funds ◽  
Negative Effects

AbstractIndex Mutual Funds (IMF) and Exchange Traded Funds (ETF) have developed into widely-accepted and fast growing passive investment instruments, offering investors a low-cost investment alternative in well diversified portfolios. Allocating more into IMFs and ETFs is the investors’ natural response to the experience with and the disillusion about actively managed investment performance. Despite these positive effects, this shift in fund allocation raises substantial concerns about possible negative effects on securities market trading and market quality, on corporate governance and product market competition as well as on systemic risk. Most research so far does not provide significant evidence of negative effects on market quality, on securities market trading, and on systemic risk. Whether the shareholdings of IMF and ETF providers reduces product market competition and whether the concentration of voting rights negatively effects corporate governance requires further analysis. Some problems may occur if ETF and IMF providers team-up with active investors. Overall, the introduction of IMFs and ETFs on broad market indices should be viewed as a financial innovation that broadens the investment spectrum providing many benefits to investors especially when viewed relative to the meager performance and performance persistence of actively managed mutual funds.

scholarly journals short-selling and its applications on the Saudi Arabia Stock Exchange Fiqhi Authentication study

2020 ◽  
Vol 28 (13) ◽  
pp. 111-137
Author(s):  
د. أحمد بن هلال الشيخ د. أحمد بن هلال الشيخ
Keyword(s):  
Saudi Arabia ◽  
Research Methodology ◽  
Stock Exchange ◽  
Short Selling ◽  
Exchange Traded Funds ◽  
Research Subject ◽  
Put Options ◽  
Study Research ◽  
Naked Short Selling

Research Subject: short-selling and its applications on the Saudi Arabia Stock Exchange. Fiqhi Authentication study Research Objectives: - Clarifying the short-selling and its applications on the Saudi Arabia Stock Exchange. - Alternatives to Short-selling Research Methodology: Analytical Descriptive. The most important findings. There is a distinction between naked short-selling – the selling of stocks that the person “does not own” or without first obtaining approval for borrowing them – and the regular short-selling where an investor sells stocks borrowed from its owner and return them back later after a certain time – covered shorting. Regular short-selling is a combined contract of sale and loan transactions, where the loan is set against a certain dividends to the borrower to be paid to the broker. There is a number of alternatives to short-selling such as: put options and inverse exchange-traded funds.

scholarly journals Short-Selling, Leverage, and Systemic Risk

2013 ◽  
Author(s):  
Amelia Pais ◽  
Philip A. Stork
Keyword(s):  
Systemic Risk ◽  
Short Selling

scholarly journals Two Investment Options for Bearish ETF Investors: Inverse ETF and Shorting ETF

2019 ◽  
Vol 7 (2) ◽  
pp. 31
Author(s):  
Božena Chovancová ◽  
Michaela Dorocáková ◽  
Dagmar Linnertová
Keyword(s):  
Short Selling ◽  
Market Volatility ◽  
Final Conclusion ◽  
Exchange Traded Funds ◽  
Short Sales ◽  
Strong Negative Correlation ◽  
Expense Ratio ◽  
The Relationship ◽  
Bid Ask Spreads

A high liquidity, low expense ratio and the possibility to conduct arbitrage allow exchange-traded funds (ETFs) to be used for short sales. Bearish investors can also buy inverse ETFs. This paper aims to outline two investment approaches for bearish ETF investors and the differences between these two approaches; it also aims to examine the relationship between price and an indicator of volume and evaluate the final positions in selected ETFs in selected periods. Short ETFs dominate in simplicity, flexibility, paying out dividends and especially in the limited size of the loss. On the other hand, their structure, which demands daily rebalancing, causes substantial deviation from the benchmark in the long-term and leads to a higher expense ratio, and lower liquidity increases bid-ask spreads. Negative aspects of ETF short selling lie in unlimited loss, high borrowing costs, the need for margin accounts, variability of loan fees and the possibility of a transaction recall by the lender. On the contrary, margin operations enable potentially higher appreciation of capital by generating rebate rates. Our results show that with the decrease in value of the most used ETFs, short interest is growing for those funds where there is a very strong negative correlation implying hedging tendencies. Short selling proved to be a more advantageous strategy in the observed period of market downturn, as well as in 2011–2017, due to negative returns, however, by applying margin trading inverse ETFs turned out to make less losses. Sector-oriented inverse ETFs are the exception, where the largest differences between these two strategies are recorded. However, the final conclusion of the suitability of one of the analyzed strategies depends on the market volatility and the direction of the market itself.

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