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  • How can the Blockchain environment affect competition?

    Click here to read the whole paper : A blockchain is a digital register of transactions, decentralized and distributed, using cryptographic techniques to ensure the integrity and security of processed information. The blockchain is revolutionizing the exchange of values, and its impact on society is compared to that of the Internet. As trust-generating machines, blockchains raise new issues in competition law, namely how to apply rules aimed at maintaining trust (European competition law) in an environment that, by nature, rejects the traditional trust of economic relationships, preferring instead the trust produced by computer code. The blockchain environment tends more and more to become a generator and support of economic exchanges. The acceleration of economic exchanges around and within blockchain technology encourages economic operators to use any means to increase their market share and thus gain a competitive advantage. Competition law aims at maintaining a virtuous economic market where competition on the merits prevails over unfair practices. We will see in the course of our study what the impact of the blockchain environment can be on competition, while making a distinction between practices carried out directly between economic operators and concerning blockchain technologies, and practices carried out within these ecosystems where the law of computer code reigns. The study analyzes the impact of the blockchain environment on competition through the prism of abuse of dominant position and anticompetitive agreements.

  • What is the impact of COVID-19 on Latin America?

    French version : English version : The Covid-19 health crisis has sharpened the economic crisis already impacted by the economic recession in Latin American countries. The contraction of economic activities, particularly in Argentina, largely due to the drop in household consumption, forced politicians to renegotiate the terms of their debts and consequently limit the deterioration of the rating by rating agencies to support the economy. Moreover, their lack of attractiveness to investors accentuated by political and trade tensions also affected by Covid-19 did not help the situation: higher inflation, higher market interest rates, depreciation of national currencies and increased social inequalities, lower oil prices as well as higher unemployment are the main negative effects on the economy of Latin American countries resulting in a downward revision of their GDP growth. As a result, the financial support of policies to curb these effects is widening the fiscal and budgetary deficit already impacted by tax evasion. To curb these crises, governments have respectively put in place exceptional measures such as tax relief, legal labour relief, allocation of financial aid and opening up the domestic market to private investors. This exceptional health crisis has profoundly changed the behaviour of Latin American governments and opened up new horizons of resilience to the economic crisis.

  • Is it possible to generate yield by using pair-trading on bonds with the cointegration method?

    French version : English version : In Finance, derivatives and arbitrage positions are two possible recourses for investors looking to increase their profit. The pair-trading is an alternative asset management method consisting on generating arbitrage opportunity between two assets having a similar evolution. For a given asset A and asset B, having a correlated price movement, the Pair-Trading strategy consists on selling the asset A once it reaches its peak value and buying the asset B once it reaches its minimum value. Specifically, pair-trading matches a long and a short position of two different correlated assets. It allows a simple hedging strategy to benefit from arbitrage opportunity in both bullish (increase) or bearish (decrease) market. Numerous pair-trading strategies are available. For instance, we can analyze the moving average dissimilarity or the correlation evolution. In this study, we will focus on Bond Pair-Trading method using the cointegration method, introduced by Engle & Granger, and stress on the possible spread cointegrations on bonds. The cointegration verifies the long-term relationship between two time series. The method consists, for two time series X𝑡and Y𝑡, to conduct an ordinary least-squares regression is made in order to determine the parameters α and β of the following equation: We then test the residue stationarity with the Augmented Dickey-Fuller (ADF). If it is the case, we consider a cointegration between two time series spread and can profit from a short run divergence between two assets. After simulating a pair-trade strategy on the bond market using the cointegration method regarding different scenarios and respecting given conditions (concerning the regression, the cointegration and the error level to determine the opportune moment to get into position) we notice that a 2-year difference in duration generates, in average, 3 more pair-trades compared to an increase of 50 bps the spread difference. We add 3 to 4 pair-trades with a duration difference of 2.5 years and 5 additional pair-trades for a 3-year duration while having an additional 5 bps for the spread difference. We conclude that increasing the spread difference or the duration difference poorly affects the number of pair-trades engendered. By studying the performance of pair-trades after 1 month, 3 months and 6 months of investment, we find that 50% of pair-trades generate negative returns over the whole time covered. However, 45% of pair-trades generate performance after 1 month, 35% after 3 months and 30% after 6 months. We can terminate on the necessity to not hold a position for a long term. By reckoning the maximum performance, we note that all pair-trades generate performance. Based on the different terms, between 55% and 70% of pair-trades generate a maximum return of 1%. The portion of pair-trades generating between 1% and 2% of return are steady: around 17% to 20%. However, from 1 month to 6 months, the portion of pair-trades generating over 2% of return goes from 30% to 45%. We can conclude that the most performing pair-trades require more time whereas the least performing pair-trades generate return swiftly. The pair-trade performances are represented by a curve with a J form. When we consider transaction costs (at least 1%) it is impossible to outperform the bond market due to peer-trade yields. The bond market is an efficient market.

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