Stock Market Data and Structure

The stock market integration has become one of the notable transformations in global financial markets as well as clear evidence of globalization. Ideally, the old-fashioned open outcry market is not common in most stock markets any longer. Demutualization of stock exchanges has completely eliminated economic, cultural and regulatory hindrances that barred development of new firms to manage more than one stock market.

top best penny stocks to buy in 2019 invest in hot picks learn how to trade top penny stocks in 2019 best investment everLuckily, several new opportunities supported by advancement in information communication technology have supported development of stock exchange largely besides making international stock exchange more feasible. Many authors argue that mergers, alliances and other attempts of cooperation between stock and derivative exchanges portrays a new strategy to increase the value of stock in exchange markets. Nonetheless, some other latent factors that also determine the integration processes among global financial market have emerged.

Recent attempts to merge financial markets have created new opportunities for research to investigate the key determinants of exchange markets integration. Such recent mergers include the following: New York Stock Exchange and Euronext in 2007 and other failed attempts such as integration of Singapore Stock Exchange (SGX) and Australian Stock Exchange in 2011. Ideally, The New York Stock Exchange (NYSE) Euronext and the DAX group in 2012 opened new possibilities for research. However, the complexity of the integration process and the high number of stakeholders’ participation in the integration processes made the development of the market structure unclear.

Since the onset of demutualization, global stock exchanges continue to react to competitive incentives such as cost efficiency and diversification. Euronext started as an example by merging with Amsterdam, Brussels, Lisbon and Paris and the London Stock Exchange (LSE) derivative market. This co-integration process continues to gain prominence between stock exchanges. top best penny stocks to buy in 2019 invest in hot picks learn how to trade top penny stocks in 2019 best investment everWith the ongoing co-integration of stock exchanges, there is increased transmission of shocks as well as modification of the prior established leader-follower link between stock exchanges. The present paper therefore, seeks to establish determinants of stock exchange cooperation by providing evidence on critical elements of a successful integration. The paper also focuses on shock transmission between different stock markets in the context of global co-integration.

In theory of mathematical finance, one of the most fundamental concepts is the idea of arbitrage. An arbitrage opportunity is the possibility of an investor to gain money without any initial capital investment and without risk of incurring any losses. Long story short, it is expected that arbitrage should not be cordoned in any financial market. Similarly, a great deal of theory of financial mathematics assumes that arbitrage opportunities should not be allowed given the market conditions. Nevertheless, this is only an assumption since if an opportunity arises, it exploits very quickly and the market shifts in such a way that the opportunity promptly disappears. The present paper seeks to help understand if arbitrage opportunities are present in derivative markets of three different countries where derivative assets of internationally known indices, long-interest rates and commodities are being traded simultaneously. The next articles help us understand if co-integration leads to arbitrage with focus being on NYSE, DAX and SGX markets.

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