An analysis of over-the-counter and centralized stock lending markets

Zsuzsa R. Huszár; Melissa Porras Prado

doi:10.1016/j.finmar.2018.10.004

An analysis of over-the-counter and centralized stock lending markets

Zsuzsa R. Huszár, Melissa Porras Prado

NOVA School of Business and Economics (NOVA SBE)

Research output: Contribution to journal › Article › peer-review

10 Citations (Scopus)

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Abstract

We provide new insights about centralized and OTC stock lending in the context of Tokyo Stock Exchange listed stocks from July 2006 to December 2009. We find that not only the demand drivers in the two markets are significantly different but also the pricing efficiency implications of the alternative markets are different. Specifically, we find that higher OTC stock lending activity is associated with greater pricing efficiency and better liquidity. The benefits of the centralized market on average is less clear, but when the OTC market is constrained, it is shown to relax short-sale constraints and improve liquidity.

Original language	English
Pages (from-to)	31-53
Journal	Journal Of Financial Markets
Volume	43
DOIs	https://doi.org/10.1016/j.finmar.2018.10.004
Publication status	Published - Mar 2019

Keywords

Pricing efficiency
Short selling
Stock lending

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10.1016/j.finmar.2018.10.004

JFM_zuszaAccepted author manuscript, 1.31 MBLicence: CC BY-NC-ND

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An analysis of over-the-counter and centralized stock lending markets

Abstract

Keywords

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