CASE STUDY
This compromises of 2 mini essays roughly 1350 for the first question and 1400 for the 2nd
The case study comprises the testimony and supporting documentation from the US House of Representatives Committee on Financial Services dated Thursday, February 18, 2021.
House of Representatives (2021) House Financial Services Committee. Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide. Hearing, 18th February. Washington: Government Printing Office. Online.
IMPORTANT Link for video available at: https://www.congress.gov/event/117th-congress/house-event/111207
IMPORTANT Link for case study text available here: https://www.congress.gov/117/meeting/house/111207/documents/HHRG-117-BA00-20210218-SD002.pdf
PLEASE WATCH VIDEO AND READ ALL OF TEXT BEFORE STARTING AS IT PROVIDES CONTEXT TO THE QUESTIONS.
QUESTIONS
Questions
Using the above case study links above, along with what you find out from your further reading
and research on the topic, and focusing on the literature discussed in the module,
answer BOTH questions below.
Answer each question separately as a stand-alone mini essay. Use HAVARD REFRENCING STYLE
Question 1(1350 words).
Discuss how the convergence of Fintech, social media and traditional financial
markets have shifted the dynamics of retail investing and utilising.
Important: research these key terms: key objects of exchange, agents/actors, ties, and structures of relations between agents, the assembling of trades and the use of distributed cognition. In case you don’t know already so that what you write makes sense.
Also fintech refers to the following: Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial technology”.
Question 2 (1400 words). Within the first US congressional hearing relating to the GameStop
controversy, Robinhood’s business model was critiqued, while Warren
Davidson, the Representative for Ohio, referenced the DTCC’s Project Ion,
which explores the use of blockchain technology to improve the efficiency of
payment and settlement functions within financial markets.
Discuss whether the widespread adoption by retail brokerages such as
Robinhood of a payment-for-order-flow model, along with the proliferation of
dark pools, represents a fundamental restructuring of financial markets
relative to the commission-based brokering model involving execution of
orders through public exchanges.
With reference to the GameStop controversy, discuss whether a blockchain based payment and settlement system (such as Project Ion or Project
Whitney) might affect current market practices.
Assessment Criteria
The following points can help you in producing a good piece of work:
• You must address the questions asked and not try to re-define them or write
about something else. ‘Not answering the question’ is among the most common
reasons for often significant losses of marks.
• Your essay must be properly referenced: only sources cited in the text of your answer should be included in the
bibliography: all sources (including those for any numeric examples used) should be
acknowledged.
o there should be no citations in your answers to sources which are not in your
references list at the end of your text, if you have not consulted the reference
directly yourself you should indicate in the text of your answer the secondary
source from which it comes. It is this secondary source which should be in
your bibliography.
• While selective quoting within quotation marks is acceptable, listing a reference
in the bibliography does not make it acceptable to copy large sections of a book
or article into your answer. You must aim to summarise more extensive points in
your own words.
• Being asked to discuss something is not the same as being asked to list things. A
discussion will consider alternative points of view and your own thinking and
evaluation of these points should be central in the discussion of the topic.
While news articles and other contemporary sources will be useful for establishing
facts in connection with the case study, it is expected that you will primarily
consult academic and professional journals; especially when discussing broader
dynamics not isolated to the case study itself. Textbooks tend not to be so up to
date.
At the same time, indiscriminate referencing is no guarantee of a good assignment.
Part of the assessment is to see how able you are to identify and use selectively the most relevant and reliable sources.
The following points will also contribute to a better-quality assignment:
• Evidence of a good understanding of key concepts and ideas
• An argument development that hangs together as a whole
• Inclusion of examples/illustrations where relevant 6
• Substantiated conclusions
• Last but not least, some creativity and originality
Suggested readings(please use own wider research and only some of these suggested readings)
The following are readings that could be of help in preparing your assignment:
IMPORTANT: please only use some of these readings to gain a better understanding of topics and use your own wider research as that gets more marks!!
Battalio, R. and Loughran, T. (2008) Does Payment For Order Flow To Your Broker Help Or Hurt You? Journal of Business Ethics, 80, pp.37-44.
Ben-Abdallah, R. and Breton, M. (2015) To Squeeze or Not to Squeeze? That Is No Longer the Question. Journal of Futures Markets, 36(7), pp.647-670.
Chiu, J. and Koeppl, T. (2019) Blockchain-Based Settlement for Asset Trading. The Review of Financial Studies, 32(5), pp.1716-1753.
Culp, C. and Heaton, J. (2008) The Economics of Naked Shorting, Regulation 31, 46- 51.
DTCC (2020a) Project Ion Case Study. 25760-PS052020. New York: The Depository Trust and Clearing Corporation. Online. Available at: https://www.dtcc.com/~/media/Files/Downloads/settlement-asset- services/user-documentation/Project-ION-Paper-2020.pdf
DTCC (2020b) Project Whitney Case Study. 25733-TC042920. New York: The Depository Trust and Clearing Corporation. Online. Available at: https://www.dtcc.com/~/media/Files/Downloads/settlement-asset- services/user-documentation/Project-Whitney-Paper.pdf
FCA (2019) Payment for Order Flow (PFOF). Pub ref: 005980. London: Financial Conduct Authority. Online. Available at: https://www.fca.org.uk/publication/multi-firm-reviews/payment-for-
order-flow-pfof.pdf
Pagano, M., Sedunov, J. and Velthuis, R. (2021) How did retail investors respond to the COVID-19 pandemic? The effect of Robinhood brokerage customers on market quality. Finance Research Letters, In Press.
Another focus for your reading in relation to writing this assignment should be the readings suggested in the module outline. This would include, particularly, the Key Texts at the end of the outline document and then the relevant lecture-by-lecture topic readings for the lecture topics which relate to the assignment case and questions. Part of the aim of the assignment is to see how well you do in identifying which lecture topics the questions relate to and then using that lecture content to develop your argument/analysis (based upon published literature).
A non-comprehensive list of other relevant readings is provided below.
Additional readings:
IMPORTANT: please only use some of these reading to gain a better understanding of topics and use your own wider research as that gets more marks!!
Bennett, W. (2014) Organization in the crowd: peer production in large-scale networked protests. Information, Communication & Society, 17(2), pp.232- 260.
Chohan, U. (2021) Counter-Hegemonic Finance: The Gamestop Short Squeeze. SSRN Working Paper 3775127. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3775127
Dent, A. and Dison, W. (2012) The Bank of England’s Real-Time Gross Settlement infrastructure, Bank of England Quarterly Bulletin (Q3), https://www.bankofengland.co.uk/-/media/boe/files/quarterly- bulletin/2012/the-boes-real-time-gross-settlement-infrastructure.pdf
Farrell, M., Green, T., Jame, R., and Markov, S. (2020) The Democratization of Investment Research and the Informativeness of Retail Investor Trading. SSRN Working paper 3222841. Available at: https://ssrn.com/abstract=3222841
Ferrell, A. (2001) A Proposal for Solving the “Payment for Order Flow” Problem.
Southern California Law Review, 74(4), pp. 1027-1088.
Godfrey, K. (2016) Detecting the great short squeeze on Volkswagen. Pacific-Basin Finance Journal, 40(B), pp.323-334.
Irrera, A. (2017) DTCC completes blockchain repo test. Online. Available at: https://www.reuters.com/article/us-dtcc-blockchain-repos-idUSKBN1661L9
Kelly, J. (2020) PwC: blockchain potentially has LOADS of potential. Online. Available at: https://www.ft.com/content/a2a43f84-1b9c-4aae-b5c5- 6786aff81654.
Lyócsa, S., Baumöhl, E., and Vŷrost, T. (2021) YOLO trading: Riding with the herd during the GameStop episode. Econstor Working Paper. Available at: https://www.econstor.eu/bitstream/10419/230679/1/YOLO-Trading-Riding- with-the-herd-during-the-Gamestop-episode.pdf
Taketoshi, M. (2016) Financial technology: Blockchain and securities settlement.
Journal of Securities Operations & Custody, 8(3), pp. 208-227.
Parlour, C. and Rajan, U. (2003) Payment for order flow. Journal of Financial Economics, 68(3), pp. 379-411.
Nissenbaum, A. and Shifman, L. (2015) Internet memes as contested cultural capital:
The case of 4chan’s /b/ board. New Media & Society.
Staer, A. and Jacquot, M. (2018) Social Media and Investor Returns: The Case of Reddit. SSRN Workin Paper 3282828. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3282828
Tsai, W., Luo, Y., Deng, E., Zhao, J., Ding, X., Li, J. and Yuan, B. (2020) Blockchain systems for trade clearing. Journal of Risk Finance, 21(5), pp. 469-492.
Werner, R. (2014a) Can banks individually create money out of nothing? — The theories and the empirical evidence. International Review of Financial Analysis, 36, pp.1-19.
Werner, R. (2014b) How do banks create money, and why can other firms not do the same? An explanation for the coexistence of lending and deposit-taking. International Review of Financial Analysis, 36, pp.71-77.
Zhang, X., Fuehres, H. and Gloor, P. (2011) Predicting Stock Market Indicators Through Twitter “I hope it is not as bad as I fear”. Procedia – Social and Behavioral Sciences, 26, pp.55-62.