Insider Trading in Commodities Markets

Verstein, Andrew

doi:10.2139/ssrn.2568140

Cited by 6 publications

(9 citation statements)

References 10 publications

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“…This calls into question the overall security of raised recently in numerous media (Wall Street Journal (2013, 2016). …”

Section: Resultsmentioning

confidence: 99%

“…Indeed, "in-11 Some traders may benefit from better due diligence, which is now very sophisticated. For instance, Verstein (2016) reports the use of helicopters with infrared cameras flying around storage facilities in Oklahoma in order to estimate oil reserves. 12 Earnings are, of course, one of the most important items of news for individual stock prices, and have been the subject of intense research in financial economics in recent years.…”

Section: Insider Trading In Commodity Marketsmentioning

confidence: 99%

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Informed Trading in Oil-Futures Market

Rousse

Sévi

2016

SSRN Journal

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The weekly release of the U.S. inventory level by the DOE-EIA is known as the market mover in the U.S. oil futures market and to be a significant piece of information for all world oil markets in which the WTI is a price benchmark. We uncover suspicious trading patterns in the WTI futures markets in days when the inventory level is released that are higher than economists' forecasts:there are significantly more orders initiated by buyers in the two hours preceding the official release of the inventory level. We also show a clear drop in the average price of -0.25% ahead of the news release. This is consistent with informed trading. We also provide evidence of an asymmetric response of the oil price to the news, and highlight an over-reaction that is partly compensated in the hours following the announcement.JEL Classification: G13, G14, Q4.

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“…This calls into question the overall security of raised recently in numerous media (Wall Street Journal (2013, 2016). …”

Section: Resultsmentioning

confidence: 99%

Section: Insider Trading In Commodity Marketsmentioning

confidence: 99%

Informed Trading in Oil-Futures Market

Rousse

Sévi

2016

SSRN Journal

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“…Benchmarks additionally contribute to the role of price discovery in financially linked contracts (Caminschi & Heaney, 2014; Frino, Ibikunle, Mollica, & Steffen, 2018; Hauptfleisch, Putniņš, & Lucey, 2016). This is not unexpected, since benchmarks are typically written into contracts, administrative regulations, and statutes (Verstein, 2016). Adjustments to the structure of these benchmarks are therefore, paramount to a wide range of participants.…”

Section: Introductionmentioning

confidence: 99%

Benchmarks in the spotlight: The impact on exchange traded markets

Aspris

Foley

O’Neill

2020

Journal of Futures Markets

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The Fix for precious metals is a global pricing benchmark that provides pricing and liquidity provision for market participants. We exploit the gradual change in the century old auction process to quantify the efficiencies related to more transparent pricing. Our focus is in the market impact of this change on exchange listed products. We find that reforms to the Fix have reduced quoted and effective bid-ask spreads and improved overall market depth. The results imply a positive spillover effect stemming from timelier and more accurate pricing information. The conditions under which we observe the benefits from transparency are related to product liquidity and the degree of market segmentation.

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“…Gebbers and Adamchuk (2010) define precision agriculture as, "a set of technologies that combine sensors, information systems, enhanced machinery, and informed management to optimize production by accounting for variability and uncertainties within agricultural systems" (Gebbers and Adamchuk 2010). The use of affective human capital is how firms cultivate external sources of profit through insider trading in foreign stock exchanges (Raskolnikov 2013, Cooper 2014, Verstein 2016, Rousse and Sévi 2019.…”

Section: Implicating the Palm Oil Tradermentioning

confidence: 99%

“…Consider Verstein's (2016) articulation of the legal excuse for allowing insider trading to legally exist in commodities future markets:…”

Section: Implicating the Palm Oil Tradermentioning

confidence: 99%

‘Smallholding For Whom?’

Snashall¹

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Wage inequality and land and labor insecurity are prevalent in Indonesia's small-farm sector for palm oil. Palm oil contract farming, a pre-harvest agreement between palm oil farmers and transnational processors and traders, facilitates smallholder participation in global agrocommodities markets, improves smallholder livelihoods, and promotes local economic development. This thesis explores how contract farming agreements between smallholder farmers of palm oil and transnational palm oil traders impact the long-term economic development of smallholder palm oil farming in Indonesia. I use linear regression and non-metric multidimensional scaling (nMDS) of annual financial data (2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019) from Indonesian commodities trading firms to examine the relative impact of transnational palm oil corporations on smallholder assets in the Indonesian palm oil industry. Temporal trends indicate that oligopolistic market conditions are associated with a growing comparative advantage in palm oil, accumulated land resources by transnational firms, and firm revenues. Linear regression models suggest that the comparative advantage in Indonesian palm oil is driven by state-oriented policies that benefit transnational capitalists and disadvantage smallholder farmers. Finally, nMDS plots revealed that smallholder farmers were inefficiently used by firms to produce palm oil, but also that smallholder assets were a significant driver to firm revenue growth. These results suggest the negative effects of palm oil contract farming on land and labor security, as well as on land tenure and sustainable agriculture. The paper concludes that a system of inequitable contract farming is operating in the palm oil industry where smallholder palm oil farmers are trapped by transnational firms into socio-economic farming schemes of low oil yield and non-market activity that provide palm oil firms with substantial non-market value services. Large transnational firms are thereby implicated in the long-run commodification of smallholder land for marginal fruit production while exploiting a farmer's non-market advantages.

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Insider Trading in Commodities Markets

Cited by 6 publications

References 10 publications

Informed Trading in Oil-Futures Market

Informed Trading in Oil-Futures Market

Benchmarks in the spotlight: The impact on exchange traded markets

‘Smallholding For Whom?’

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