Quantitative Trading (II)

Posted in Blog at 12:45 pm

In the middle of a spirited online debate on the pros and cons of High-Frequency Trading, and whether those traders working exclusively from mathematical algorithms were aiding the cause of price discovery or causing causing unnecessary fear in markets, someone asked: "so why the excessive volatility[?]"  I could not resist responding.  The following is an expanded version of my comments: We have excessive volatility because it is the interest of trading firms to encourage it, that's why. And Read more [...]


Against Quantitative Trading

Posted in Blog at 5:24 pm

I wrote this in response to a thread on LinkedIn, on which Mark Rome raised the question, “Is it Time for a Market That Prohibits High-Frequency Trading?”  regarding ETFs and all sorts of quantitative techniques, as well as HFT itself, on 5 November 2011: I'm afraid that most of this discussion loses sight of the real issues. Liquidity is not an end in itself. Cheap execution is not an end in itself. And I'm afraid that huge bonuses are not the goal of capital markets, either, although Read more [...]


Apropos the Hewlett Packard board: What is wrong?

Posted in Blog at 10:40 am

The fact that most of the new members of the HP board were vetted by Apotheker himself, without following HP's normal board recruitment procedures, probably didn't help, but the real fault lies further back. HP was a company with a history of a strong indigenous corporate culture, and a board thoroughly in tune with that culture. The open feud between directors siding with William Hewlett and those supporting then-CEO Carly Fiorina, followed by the long-running director leaks scandal endangered that Read more [...]


Has Someone Hijacked Corporate Governance? An Internet Dialogue

Posted in Blog at 1:02 pm

The following exchanges occurred on an internet message board devoted to corporate governance issues, and involving mostly professionals working in the field. The thread began with one of the participants alleging that governance had been “hijacked” by various parties who wanted to transform it into something other than a means by which a board would be run optimally.  I felt that this was too restrictive and mechanical a definition, but also that the notion that there was some coherent ‘they,’ Read more [...]


Stock Lending: the current state of play

Posted in Blog at 5:39 pm

The UK financial regulators recently conducted a consultation regarding the topic whether there were conflicts of interest between asset owners and their managers, regarding short-term and long-term perspectives, and which practices tended to promote one at the expense of the other.  I received an inquiry from a prominent academic regarding stock lending, and asking me whether comments regarding it were warranted in responses to the consultation.  This gave me occasion to make an updated review Read more [...]


“Reports of my Death are Greatly Exaggerated”

Posted in Blog at 11:20 pm

John Richardson has published a thought-provoking piece entitled "Corporate Governance is Dead" on the Global Investment Watch website, www.globalinvestmentwatch.com.   While he raises many good points about the historical development of the modern governance movement, and demonstrates that it has indeed changed over the years, I disagree very strongly with his conclusion that it is now dead, and summarized my thoughts on the subject for a thread on the Yale Governance Forum.  For those who may Read more [...]


“Regulatory Spawn” and Proxy Advisors

Posted in Blog at 2:14 pm

On October 26th, 2010, a piece written by John Carney of CNBC was published and spread around the internet, claiming that the proxy advisors were similar to the credit ratings agencies in that their judgments were similarly biased (in the case of the proxy advisors “by a small clique  . . . whose interest may conflict with clients”) and that the only reason these existed at all was because of a regulatory mandate, which required institutional investors to protect themselves by voting in accord Read more [...]


Ballot-box Stuffing on Behalf of Retail Investors

Posted in Blog at 6:47 pm

The Wall Street Journal ran a piece on Friday, October 22nd, stating and appearing to give support for a proposed rules change that proxy voting by retail shareholders should be encouraged by permitting shareholders to leave standing instructions with their brokers or custodians to vote their shares in a particular way—e.g., always in support of management recommendations, or always in support of all resolutions, rather than requiring them to return a proxy card with their decisions regarding that Read more [...]


How do we get Financial Intermediaries to Police Themselves?

Posted in Blog at 2:20 pm

Patience Wheatcroft, one of the Wall St. Journal Europe’s regular contributors, had a piece on a U.K. regulator’s seeming willingness to add corporate culture to the list of things for financial regulators to attempt to control.  The occasion was a speech by Hector Sants, who was until recently head of the British Financial Services Authority, at the Mansion House on the subject, “Should a regulator seek to regulate culture?”  I had known Hector well in his earlier life as an analyst and Read more [...]


Corporate Governance and Business Strategy

Posted in Blog at 3:06 pm

In an exchange on the role and importance of corporate governance as a driver for business performance, a respondent seemed to feel that I was making governance out to be a compliance issue, rather than, as he saw it, a strategic issue for companies.  I thought that this mistook my position, and felt the need to respond.  Although I do not consider corporate governance a strategic matter per se, but rather a question of risk management, good governance is essential in order to execute a strategy Read more [...]