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Late Trading in Mutual Fund Shares – The Sequel?

Author

Listed:
  • Moritz Wagner

    (The University of Auckland Business School)

  • Dimitris Margaritis

    (The University of Auckland Business School)

Abstract

This paper provides new evidence of late trading activities in the mutual fund markets of France, Germany and the UK. We find that investors who are allowed to trade late can earn substantial returns between 18% and 35% annually. Late trading accounts for up to 0.6% of daily flow. Evidence of such illicit and abusive trading practices was uncovered in 2003 during a large scandal in the US fund industry. Our findings suggest that late trading may still persist in European markets. However, we do not find evidence of late trading in the UK.

Suggested Citation

  • Moritz Wagner & Dimitris Margaritis, 2019. "Late Trading in Mutual Fund Shares – The Sequel?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 55(1), pages 89-109, February.
    • Handle: RePEc:kap:jfsres:v:55:y:2019:i:1:d:10.1007_s10693-017-0280-7
    DOI: 10.1007/s10693-017-0280-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Mutual funds; Fund flows; Late trading;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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