VALUE CHAIN, FINANCIAL MARKETS AND INVESTMENT BANKING

Scientific project

The FBF IDEI “Value chain of investment banking and financial markets” Chair focuses on six topics: high-frequency trading, clearing systems, shadow banking, the positioning of investment banking and the market in universal banking, pre-trade transparency and bond liquidity, and the importance of collateral in terms of security and liquidity. 

• High-frequency trading. To meet the demand of FBF members, at the first IDEI FBF convention we launched a long-term research programme on algorithmic trading and high-frequency trading.
• Compensation systems. Once again, thanks to input from the FBF, we have embarked on a long-term research programme that includes four papers.
• Shadow banking. Shadow banking refers to the situation where institutions, which do not receive deposits and are not subject to prudential regulation, engage in banking activities. Within the framework of the Chair, Guillaume Plantin has started to think about the risks linked to the growth of this sector.
• The positioning of investment and market banking in universal banking. Universal banking combines commercial banking and investment banking. Does this combination make it possible to exploit synergies? Or is it on the contrary costly, in particular because of the risk that investment banking may destabilize the commercial side? These issues are central to bank strategies and to the concerns of regulators (from the Glass-Steagall Act to the Volcker rule).
• Pre-trade transparency and bond liquidity. The corporate bond market is less developed and less liquid than the equity market. This situation can be costly for the economy if it restricts firms’ access to finance. How can the functioning of the bond market be improved? This new research axis has given rise to the empirical studies.
• The importance of collateral in terms of security and liquidity. This new research area will give rise to a research project.