Research: Pre-trade Hedging: Evidence from the Issuance of Retail Structured Products | Weatherhead School at Case Western Reserve University

Research: Pre-trade Hedging: Evidence from the Issuance of Retail Structured Products

Posted 12.14.2020

Research: Pre-trade Hedging: Evidence from the Issuance of Retail Structured Products

Li Wang, assistant professor of banking and finance, published new research in the Journal of Financial Economics on pre-trade hedging.

Wang and her co-authors find evidence consistent with previously unrecognized market manipulation by broker-dealers. Specifically that pre-trade hedging, which is distinct from front-running, alters prices at which derivative trades occur. The team shows this behavior is intentional by exploiting variation in the design of structured equity products (SEPs).

See the full research.


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