Nach oben pdf Market effects of voluntary climate action by firms: Evidence from the Chicago Climate Exchange

Market effects of voluntary climate action by firms: Evidence from the Chicago Climate Exchange

Market effects of voluntary climate action by firms: Evidence from the Chicago Climate Exchange

Abstract Why do for-profit firms take voluntary steps to improve the environment? Brand appeal to green consumers or investors, the ability to influence or avoid regulation, or the experience gained for future regulation, have all been suggested as possible reasons. The empirical evidence is decidedly mixed. This paper uses 19 years of monthly stock price returns to examine the profitability of participation in the world’s largest voluntary greenhouse gas mitigation program: the Chicago Climate Exchange. After controlling for systemic market risk as well as industry-specific shocks, we find no statistically significant impact of announcing to join CCX on excess returns. However, the market appeared to be sensitive to changes in abatement costs implied by CCX membership. Most strikingly, the progress of proposed greenhouse gas legislation (the Waxman-Markey bill) had a positive impact on excess returns for CCX member firms, suggesting that the most profitable incentive for firms to join CCX is to prepare for future regulation. Our results imply that relying on voluntary approaches alone to combat climate change may not be enough.
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What do we learn from public good games about voluntary climate action? Evidence from an artefactual field experiment

What do we learn from public good games about voluntary climate action? Evidence from an artefactual field experiment

Result 5: Quantitatively, subject pool effects outweigh the effect of game parame- ters in explaining individual consistency. These differences cannot be attributed to observable characteristics. As a first step, we define a measure of individual behavioral consistency. By our stylized defini- tion, a pair of choices would count as perfectly consistent if a decision-maker selected identical actions in an identical setting. As a simple measure that conforms with this definition, we calcu- late the absolute difference between the fractions of endowment contributed in Task I and Task II and subtract it from one. Clearly, whether or not a given decision maker indeed perceives choices in Task I and Task II as equivalent could depend on context specific factors (e.g., game parameters and framing), individual characteristics determining his preferences in each task, and the interaction of these factors (Furr and Funder, 2004). Applied to our experiment, if behavior in both tasks was driven by exactly the same set of individual characteristics and contextual factors did not matter, our measure would be one for the same individual. In contrast, if for the two tasks these factors worked in opposite directions, the measure would tend towards zero. Figure 3 displays the distribution of this consistency measure for the two distinct subject pools. From left to right, we show three different averages: One average across all ten decisions of Task I, another only for low MPCR (< 0.4) decisions, and the third only for high MPCR (≥ 0.4)
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Reaching a climate agreement: Do we have to compensate for energy market effects of climate policy?

Reaching a climate agreement: Do we have to compensate for energy market effects of climate policy?

0.4 0.4 0.6 0.9 0.0 1.7 0.9 0.9 0.5 0.4 0.5 1.5 0.9 3.5. An alternative scenario excluding FSU/MEA from compensation While there is experimental evidence that an [equal loss] scenario is perceived as fair and can increase the probability to contribute sufficiently to the global good of mitigating global warming the necessary large (absolute) compensation payments to exporters Former Soviet Union and Middle East/ North Africa might be politically infeasible in reality. We thus look at one alternative scenario where no surplus allowances are granted to these two regions in order to reduce the overall transfers. However, the high welfare losses under a [tax] or [CDC] scenario are not likely to induce participation of these regions. We therefore assume that there is no climate policy in these countries. To keep global emission constant to the other climate policy scenarios, the remaining countries therefore have to abate more. As a result, welfare losses in the Former Soviet Union and Middle East/ North Africa now decrease to 7.6% and 11.3%, respectively. They are thus better off than in the [tax] and [CDC] scenario. The remaining high welfare loss can mostly be explained by changes in energy trade. Due to carbon leakage the unconstrained emissions in these regions are even higher than in the [BAU] scenario and the other regions have to increase their abatement accordingly. Their cumulated emissions from 2012 to 2050 decrease by 14% compared to the other climate policy scenarios. Since abatement is especially cheap in the Former Soviet Union and Middle East / North Africa, their emissions are 80 – 90% higher than in the climate policy scenarios that include action in these regions. Thus, even when equal loss within the climate policy coalition is achieved, the average loss of 2.1% is higher than in the scenario where the Former Soviet Union and Middle East/ North Africa are compensated for adverse effects on the energy market (1.5%). This is due to the highly inefficient distribution of abatement, which leads to a zero carbon price in the Former Soviet Union and Middle East/ North Africa but a carbon price above US$ 1200/tCO 2 in 2050
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Voluntary Corporate Climate Initiatives and Regulatory Loom: Batten Down the Hatches

Voluntary Corporate Climate Initiatives and Regulatory Loom: Batten Down the Hatches

6 Conclusion A better understanding about corporate motivation for joining voluntary initiatives informs about the benefits of expedient program design and lets investors know under which conditions such engagements may be profitable. This paper uses event studies to compare the perceived market value of two voluntary climate initiatives by exploiting two decisive and unexpected events. In our main analysis we compare the immediate effect of the Waxman- Markey Bill on stock prices for members of the Climate Leaders (CL) and the Chicago Climate Exchange (CCX), two initiatives that pursued the goal of curbing CO 2 emissions with different strategies. The Waxman-Markey Bill intended to establish a mandated carbon market in the US and surpris- ingly passed the vote in the House of Representatives in June 2009. This translates into an increase in the economic threat of upcoming compliance costs. The incident thus lends itself well to an event study. To round up the picture, in our complementary analysis we compare the market reaction to the preceding membership announcements to these two initiatives. We interpret our findings with the help of a very simple theoretical framework. On the surface, the estimated market reaction to the Waxman-Markey Bill in our main analysis would indicate a positive value correction for both CL and CCX firms, suggesting that the market considered membership in these initiatives an advantageous headstart for the now seemingly impend- ing mandated carbon market. It stands to reason, however, that the imple- mentation of the Waxman-Markey Bill would likely have affected different industries differently. In a more detailed specification, we isolate the firm level effect by extending our baseline model specification with economic and (more detailed) business sector returns. This puts the positive market re- action vis-à-vis the CL and the CCX firms into perspective. Members of the CCX continue to show positive abnormal returns, albeit at lower levels. For the CL firms the industry effects fully account for the observed positive returns during the passage of the bill.
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How are firms affected by exchange rate shocks? Evidence from survey based impulse responses

How are firms affected by exchange rate shocks? Evidence from survey based impulse responses

Column 2 of Table 2 shows the regression results for the cost impulse responses. Both a higher import share from the euro area as well as a higher import share from the rest of the world are associated with a stronger reduction in expected total costs in response to the exchange rate shock. The effects are statistically different from zero at the 5% significance level at least. Regarding economic significance, the euro area import share effect is more than twice as big than the rest of the world import share effect. Hence, importing firms clearly benefit from the exchange rate shock, and the more they import from the euro area. Again, the time fixed effect is negative and statistically different from zero at the 1% significance level implying that the reduction in expected costs in response to the exchange rate shock is stronger at the 18-months horizon than at the 6-months horizon. Neither firm size, market power nor oil dependency have an effect on firm-level impulse responses. The unconditional exchange rate forecast turns out negative and significant at the 5% significance level. This finding is reassuring: the higher a firm’s expected depreciation of the Swiss franc for the year 2013, the bigger is the size of the exchange rate appreciation shock that results from the change in the exchange rate floor and the subsequent appreciation from 1.20 to 1.10 Swiss francs per euro in July 2012. And the bigger the size of the shock, the bigger is the expected reduction in costs in response to the shock as compared to the no shock scenario. That said, the overall majority of firms expects the Swiss franc/euro exchange rate to stay at or slightly above 1.2 Swiss francs per euro.
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Assessing the Effects of Climate Policy on Firms' Greenhouse Gas Emissions

Assessing the Effects of Climate Policy on Firms' Greenhouse Gas Emissions

Revenue data are available only for the companies that responded to the CDP survey (i.e., this information is not available for those companies that chose not to participate). However, to control for self-selection, revenue data are needed for the non-respondents and the Thomson Reuters’ Thomson.One Banker dataset was used to this end. Since some companies’ fiscal years differ from calendar years, revenue data were assigned to a calendar year using the same rule as for emissions data. Thus, revenues of companies whose fiscal year ended between August 1 of year t and July 31 of year t+1 were assigned to calendar year t. Market capitalization figures were retrieved as of December 31 of the year before each CDP wave. Because companies, and also the Thomson.One Banker dataset, report financial data in the respective country’s currency, these figures were converted to USD using the official exchange rates calculated as an annual average and reported by the World Bank in its World Development Indicators dataset (World Bank, 2014). The resulting revenues and market capitalization figures are expressed in million USD. To obtain real figures and be consistent in terms of basis year and currency, revenues and market capitalization data were deflated using the GDP deflator of the U.S. Bureau of Economic Analysis with basis year 2009 (US BEA, 2013).
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The climate effects of electric cars: expensive, but underestimated

The climate effects of electric cars: expensive, but underestimated

The rules of the economic environment matter Although these studies try to cover the entire consumption and often even the production cycle of vehicles in terms of pollutant emissions, they have a problem. They completely ignore the economic environment under which CO emissions occur. The results are therefore more than questionable in the European context.

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Adaptation to climate variability: Evidence from German households

Adaptation to climate variability: Evidence from German households

Figure 2: Marginal Effects of Average Summer Temperature in °C on Adaptation Proba- bility 5 Summary and Conclusion By lowering individuals’ mental and physical performance and increasing the risk of heat- related morbidity and mortality, heat stress has strong negative effects on human welfare. The heat burden is likely to increase in many countries of the world owing to climate change. Therefore, in addition to efforts to mitigate climate change, more attention should be paid to strategies for adapting to its impacts. Yet, despite its high potential to extenuate negative effects, private adaptation is widely understudied. A key reason is that data on private adaptation activities is lacking, as climate change and adaptation to its consequences are long-run processes.
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Sands are running out for climate protection : the Doha Climate Conference once again saves the UN climate process while real climate action is shelved for later

Sands are running out for climate protection : the Doha Climate Conference once again saves the UN climate process while real climate action is shelved for later

of results-based action. These submissions had been considered by the AWG-LCA during 2012 and resulted in a technical paper for further consideration in Doha. Hence, the major fora of REDD+ negotiations in Doha were the SBSTA and the AWG- LCA, with the treatment of technical issues under the SBSTA being the main track in the first week of negotiations. After the opening session of the REDD+ SBSTA contact group Parties shifted directly into the informal negotiations mode and meetings were held behind closed doors until Saturday to discuss methodological guidance for NFMS and MRV. Initially, substantial progress was achieved: national forest monitoring systems were agreed to be linked to safeguard information systems and a link between the setting of reference levels and MRV methods was established, ensuring that consistent and similar methods need to be used in all countries. However, negotiations stalled when Parties touched on the issue of verification and a major divide between donor countries and developing countries emerged. While Norway, currently the biggest investor in activities to reduce deforestation, was pushing for independent verification of actions by international experts, Brazil was opposed to external verification, arguing that MRV of REDD+ should be consistent with the process of international consultation and analysis (ICA) that was agreed for NAMAs and which is considerably softer on developing countries. With Parties unable to resolve this issue in Doha and an agreement on verification out of reach, the final text on NFMS and MRV remained bracketed and Parties decided to continue the work during 2013 with a draft decision to be prepared by COP19 in Warsaw. 29
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Effects of international climate policy for India: Evidence from a national and global CGE model

Effects of international climate policy for India: Evidence from a national and global CGE model

16 important consequences of international climate policy. For DART it is not possible to exclude the price effect 3 , but the price effect can be separated in the national model. We can also determine the relative importance of fuel prices which show the strongest reaction in the policy scenario compared to the baseline and the price changes of other sectors which stand for the larger share of import and export values. In DART, import prices that India is facing on the world market are reduced by 64% for coal, 56% for crude oil, 52% for refined oil and 38% for gas, respectively. Price changes of other sectors are in the range of ±10%. Figure 5 presents the welfare changes induced by price changes in global fossil fuel markets for different transfer scenarios. For adjustments in fossil fuel prices only [P-fuel], all households gain because India is a fossil fuel (net) importer. In 2030, richer households with a more fossil fuel intensive consumption bundle have relatively higher gains. Poorer households and UH2 consume less fossil fuel or energy intensive goods and thus experience lower gains. In most scenarios this pattern remains throughout the time horizon in the model.
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Effects of international climate policy for India: Evidence from a national and global CGE model

Effects of international climate policy for India: Evidence from a national and global CGE model

16 important consequences of international climate policy. For DART it is not possible to exclude the price effect 3 , but the price effect can be separated in the national model. We can also determine the relative importance of fuel prices which show the strongest reaction in the policy scenario compared to the baseline and the price changes of other sectors which stand for the larger share of import and export values. In DART, import prices that India is facing on the world market are reduced by 64% for coal, 56% for crude oil, 52% for refined oil and 38% for gas, respectively. Price changes of other sectors are in the range of ±10%. Figure 5 presents the welfare changes induced by price changes in global fossil fuel markets for different transfer scenarios. For adjustments in fossil fuel prices only [P-fuel], all households gain because India is a fossil fuel (net) importer. In 2030, richer households with a more fossil fuel intensive consumption bundle have relatively higher gains. Poorer households and UH2 consume less fossil fuel or energy intensive goods and thus experience lower gains. In most scenarios this pattern remains throughout the time horizon in the model.
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THE CO-BENEFITS OF CLIMATE POLICY: EVIDENCE FROM THE EU EMISSIONS TRADING SCHEME

THE CO-BENEFITS OF CLIMATE POLICY: EVIDENCE FROM THE EU EMISSIONS TRADING SCHEME

As part of its unilateral climate change policy, the EU has established a series of policy targets it aims to meet over the coming decades. What is more, the EU is determined to keep its emissions trading scheme for CO 2 as its flagship climate policy instrument. Over the past two decades, tradable permit systems have become a well-established policy instrument for regulat- ing environmental externalities. Emissions trading has been credited with substantially reducing the costs of environmental regulation (Ellerman et al., 2010). However, practical experiences with trading schemes for conventional pollutants have revealed some unintended consequences that arise from the spatial distribution of pollution. With a uniform permit price, the single cri- terion for the allocation of pollution in space is the marginal abatement cost. If the market shifts pollution from low-damage regions to high-damage regions, this may create large inefficien- cies that interfere with the goal of efficient environmental regulation (Muller and Mendelsohn, 2009). Moreover, the redistribution of pollution to places with low-income populations may exacerbate inequality (Fowlie et al., 2012). At a glance, these issues may seem irrelevant for the EU ETS because CO 2 is a harmless gas with no known local impacts. However, if ancillary
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Luring Others into Climate Action: Coalition Formation Games with Threshold and Spillover Effects

Luring Others into Climate Action: Coalition Formation Games with Threshold and Spillover Effects

Abstract We study the effect of leadership in an experimental threshold public ‘bad’ game, where we manipulate both the relative returns of two investments (the more productive of which causes a negative externality) and the extent to which the gains from leadership diffuse to the group. The game tradeoffs mimic those faced by countries choosing to what degree and when to transition from incumbent polluting technologies to cleaner alternatives, with the overall commitment dictating whether they manage to avert dangerous environmental thresholds. Leading countries, by agreeing on a shared effort, may be pivotal in triggering emission reductions in non-signatories countries. In addition, the leaders’ coalition might also work as innovation and technology adoption catalyzer, thus producing a public good (knowledge) that benefits all countries. In our game, players can choose to tie their hands to a cooperative strategy by signing up to a coalition of first movers. The game is setup such that as long as the leading group reaches a pivotal size, its early investment in the externality-free project may catalyze cooperation by non-signatories. We find that the likelihood of reaching the pivotal size is higher when the benefits of early cooperation are completely appropriated by the coalition members, less so when these benefits spillover to the non-signatories. On the other hand, spillovers have the potential to entice second movers into adopting the ‘clean’ technology.
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The Economic Effects of Brexit - Evidence from the Stock Market

The Economic Effects of Brexit - Evidence from the Stock Market

not yet evident at the time of the Lancaster House speech. Thus, we do not expect a signi…cant correlation between the recession-proof dummy and abnormal returns for our last two events. Finally, we include two measures of …rms’ exposure to future trade barriers between the UK and the EU. For goods-producing industries, we use the EU’s most-favoured nation (MFN) tari¤s, which are charged on imports from countries that do not have a preferential trade agreement with the EU. 10 While the Lancaster House speech stressed that the UK would be seeking EU market access through a comprehensive free trade agreement, it also did not rule out the UK leaving the EU without an exit deal. In that case, the UK would have to fall back on trade governed by WTO rules. This would imply facing EU MFN tari¤s as well as, in all likelihood, imposing such tari¤s on imports from the EU. For services trade, future trade restrictions are harder to predict and would take the form of non-tari¤ barriers (NTBs). If the UK were to leave the single market, as implied by May’s Conservative Party conference speech and explicitly stated in her Lancaster House speech, it would lose preferential access to EU services markets. Moreover, rules and regulations would likely diverge from the EU over time, leading to further increases in NTBs. Hence, we use the service trade restrictiveness index (STRI) developed by the World Bank to measure EU member countries’policies as applicable to non-EU providers. 11
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Regional economic effects of differentiated climate action, carbon leakage, and anti-leakage measure

Regional economic effects of differentiated climate action, carbon leakage, and anti-leakage measure

REF  ‐7  ‐0.4  2  49  96  31   ‐  11  13  ‐0.8  HIGH  ‐18  0  3  118  197  32   ‐  24  13  ‐0.9  Note:  The  welfare  indicator  is  the  Hicksian  equivalent  variation  and  it  relates  only  to  current  consumption  (environmental benefits are not taken into account). 

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Moral foundations and voluntary public good provision: The case of climate change

Moral foundations and voluntary public good provision: The case of climate change

University of Oldenburg 26121 Oldenburg, Germany Abstract: Economic theory has invoked moral motivation as an explanation for the voluntary provision of public goods but is vague with regard to the specific moral concerns involved. Using climate change as a case study, this paper relates morally-motivated public good provision to the six moral foundations (MFs) identified by moral psychologists: Care, Fairness and Liberty (individual- focused), and Loyalty, Authority and Sanctity (group-focused). Using data from the European Social Surveys it is found that using the MFs in addition to standard explanatory variables improves the explanation of climate-friendly behaviors and endorsement of climate-friendly regulations by 44 percent. While the Fairness and Care foundations are strong and robust predictors of the dependent variables, the Loyalty foundation contributes positively only when neglecting the nature of climate change mitigation as a global public good. More generally, in contrast to the individual- focused MFs (that apply to all individuals), the group-focused MFs are of little direct relevance for climate change mitigation, as the benefit from mitigation extends beyond the in-group (family, neighborhood, region, or nation) to which these MFs refer. Group-focused MFs are only of indirect relevance as their endorsement fosters general environmental concern.
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The role of the carbon market in future climate policy

The role of the carbon market in future climate policy

The other intractable issue is that of adaptation. Adaptation is a key element for the “beyond 2012” cli- mate change agenda, and it was India that hosted the COP 8 that brought adaptation back to prominence after negotiations had skewed towards mitigation and CDM. The Delhi Declaration focused the attention of the international community squarely on adaptation, and in Montreal the fi ve year work programme on adaptation was adopted, although the programme is primarily geared towards technical papers, expert groups and workshops to support adaptation plan- ning, experience sharing, adaptation technologies and economic diversifi cation. There is, however, a growing need to link the adaptation agenda with the development agenda. The Secretary of the Ministry of Environment & Forests of the Government of India, at a side event at CoP 11/MoP 1, said that “… develop- ment is the best form of adaptation”. This statement, however, has to be contextualised, lest it is assumed that with development, resilience and coping capaci- ties will be automatically enhanced, and there are no additional measures or resources that are required to deal with climate variability and climate change. It has been opined that to include adaptation in the future regime it may be more relevant to base it on the UNFCC (rather than the Kyoto Protocol) and also non- UNFCCC instruments such as existing international
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The impact of climate change risks on firm value: Evidence from the Korea

The impact of climate change risks on firm value: Evidence from the Korea

2. Literature Reviews and Hypothesis Previous studies on the impact of GHG emissions on firm value addressed whether natural environmental factors can be used for company valuation. Busch and Hoffmann (2011) look into the relationship between a company’s carbon emissions and its financial performance. Their study defines the act of emitting GHGs as a corporate environmental activity, one of many corporate social activities, and explains why climate change is regarded as a critical problem that causes systematic changes in the business environment. First, countries are gradually reinforcing climate policies and consumers are utilizing information about low carbon footprints and energy efficiency in their decision making (Brickman, Hoffman, and Oppenheim, 2008). These trends make such information the primary interest of outside stakeholders. Second, the world is running short on fossil fuels, increasing the price of such fuels (Busch and Hoffmann, 2007). In turn, the higher fuel prices are affecting manufacturing costs, creating extra costs for emitting GHGs in a variety of regions and industries. Third, concerns about the global temperature change are reflected in corporate managerial strategies, promoting the development of renewable energy and new low-carbon business models.
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The labor market effects of opening the border: Evidence from Switzerland

The labor market effects of opening the border: Evidence from Switzerland

To better identify winners and losers among native workers, and to understand the channels through which these wage and employment effects occurred, we analyze, in detail, the impact of opening the border on the flow of native workers into and out of employment, and into and out of the municipalities. We also track their transitions across occupations, jobs, sectors, and the heterogeneity of effects across sectors and types of firms. We find suggestive evidence of three interesting mechanisms. First, fewer highly-educated native workers from other regions of Switzerland moved into municipalities close to the border after the liberalization. However, also fewer highly-educated natives moved out of border municipalities. While CBW may have reduced immigration of natives from the rest of Switzerland, it also encouraged highly-educated workers to stay, consistent with the positive wage effect on this group. Second, native highly- educated workers were more likely to move to higher managerial positions after the opening of the border, and middle-educated workers upgraded their occupations to higher paid ones. Third, wages of natives increased the most in the high-tech manufacturing sector following the free mobility of CBW. Also highly-educated workers, in the knowledge-intensive sector and in large firms, experienced larger wage increases, and these are the same sectors that absorbed most of the CBW. There is also some evidence of an increase in employment (but not wages) of low-skill intensive services such as hospitality, restaurant, and food services. The employment growth of less-skilled natives is consistent with a simple complementarity effect of highly-skilled CBW who, by working in more cognitive and analytical-intensive occupations, may have increased demand for more manual type of jobs filled by the less skilled.
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Fast trading and the virtue of entropy: Evidence from the foreign exchange market

Fast trading and the virtue of entropy: Evidence from the foreign exchange market

Our results complement the conclusion of the vast body of literature mentioned above, relating quantitative characteristics of trading (e.g. bid-ask spread, orders flows, etc.) to fast trading and microstructure features of markets (e.g. liquidity provision, price impact, market efficiency, etc.) as in e.g. Brogaard (2010), Brogaard et al. (2014), Easley et al. (2012). A number of studies—a leading example being Hendershott et al. (2011, 2013 and 2014)—find potentially positive effects of fast trading on market liquidity and performance, in terms of cost of trading and informativeness of quotes. Breedon et al. (2018) find that algorithmic traders withdrew liquidity and generated uninformative volatility in Swiss franc currency pairs in the wake of the removal of the cap on the Swiss franc on 15 January 2015, which came as a complete surprise to market participants, while human traders did the opposite, although they find no evidence that algorithmic trading propagated these adverse effects on market quality to other currency pairs. Van Kervel and Menkveld (forthcoming) find that high-frequency traders initially lean against large institutional orders but eventually change direction and take position in the same direction for the most informed institutional orders. Our specific contribution is to show the key role played by the pattern of exchange rate quotes, and document how this varies with fast trading. Focusing on the foreign exchange market reaction to public news, we provide evidence that the pattern of trade conveys complex information for market participants, with significant effects on the process of price formation—we document their importance over a 30 minutes windows. Overall, our findings suggest that fast trading not only matters for the microstructure of the foreign exchange market, but may also have broader aggregate implications.
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