CSFME Research

The Center's work is directed toward activities which contribute directly to the efficiency of capital markets. Among these, Corporate Governance, Securities Lending, and Counterparty Risk Management have been the focus of intensive examination and analysis.

Research Highlights

Empty Voting

A paper in the Spring 2013 issue of The Journal of Financial Research by Shane M. Moser, Bonnie F. Van Ness, and Robert A. Van Ness of The University of Mississippi investigates the securities lending market around proxy record dates for evidence of proxy abuse.  The paper concludes that the data shows no evidence of abusive short lending around proxy record dates.  CSFME provided data for this study as well as comments and feedback on the paper. (full paper)

In 2006, academic researchers claimed to have found evidence of vote buying in the U.S. securities lending markets. Their studies claimed that spikes in equities were prima facie evidence of borrower manipulation of corporate governance. That research was cited in a widely-reported 2006 law review paper (Professors Hu and Black of the University of Texas Law School) equating securities lending with derivative abuses. Extensive CSFME research, later affirmed by two prominent academic teams, found several reasons to question the validity of the earlier academic findings.
(full paper)

Lender-Directed Voting

Academic claims that empty voting was rampant in U.S. securities lending markets were rebutted by the Center's 2009 report. However, no similar research has yet been conducted for non-U.S. markets. In recognition of this, the European Securities Markets Association (ESMA) issued a Request for Information in September 2011 about lending practices in EU markets. In response, the Center announced a live pilot of Lender Directed Voting for the 2012 proxy season. (full article)


Liability Dynamics

After the collapse of Bear Stearns and Lehman Brothers, investors were shocked to learn that even senior executives often fail to appreciate how vulnerable their firms are when denied access to short-term funding markets. Similar funding denials preceded the de facto collapses, shotgun mergers, or bailouts of other large investment banks, as well as AIG, Citigroup, Fannie Mae, and Freddie Mac. (full article)



CSFME Library

CSFME's library houses reports, studies, and other documents created by CSFME and other financial industry experts and academics.  This collection provides market participants with easy access to the resources they need to understand the most current issues affecting market efficiency.

Library Documents

Document Collection

Wed 12/09/2015 @ 03:20 - Uploaded by CSFME

CSFME letter to the New York Stock Exchange detailing the benefits and legal considerations of Lender-Directed Voting.

Wed 04/03/2013 @ 05:25 - Uploaded by CSFME
Borrowed proxy abuse study results presented at the 2012 IMN Beneficial Owners' Securities Lending Conference.  The results indicate that previous findings of borrowed proxy abuse are unsubstantiated after testing with larger data sets.
Wed 04/03/2013 @ 05:24 - Uploaded by CSFME
Lender-Directed Voting (LDV) presentation at the 2012 IMN Beneficial Owners Securities Lending Conference.  The presentation highlights the benefits, operations, and current status of LDV, concluding that a live pilot is on-going.
Tue 11/29/2011 @ 07:52 - Uploaded by CSFME
This September 17, 2010 paper on the Basel III requirements on capital, liquidity and leverage (as amended after the 26 July communiqué and ratified on September 12, 2010) analyzes implications, issues and interconnections between them and discuss some of new trends in best practice of banks’ risk management and capital optimization that are likely to emerge as a result.
Mon 11/28/2011 @ 02:15 - Uploaded by CSFME
This July 2010 Federal Reserve Bank of New York monograph documents the origins, evolution, and economic role of the shadow banking system.  The report is intended to aid regulators and policy-makers to reform, regulate and supervise the process of securitized credit intermediation in a market-based financial system.
Fri 11/11/2011 @ 01:53 - Uploaded by CSFME
In his statement before the U.S. Securities and Exchange Commission's September 29, 2009 roundtable on securities lending, CSFME's Executive Director Ed Blount outlined the Center's research findings regarding cash collateral reinvestment, borrower default, lending agent compensation and fee splits, and proxy voting.  
Fri 11/11/2011 @ 01:51 - Uploaded by CSFME
“Risks and Responsibilities in Securities Lending” by Ed Blount 
Testimony to the United States Senate Special Committee on Aging 
Chairman Herb Kohl (D‐WI) and Ranking Member Bob Corker (R‐TN), Wednesday, March 16, 2011. 

Wed 11/09/2011 @ 03:27 - Uploaded by CSFME
Early in 2011, Ed Blount, CSFME Executive Director and ABA Banking Journal contributing editor, interviewed Gregoire Bordier, senior partner at Bordier & Cie. They discussed the experience of being a private banker in the midst of the financial crisis, and what makes a private bank in Switzerland tick.
Tue 11/08/2011 @ 03:48 - Uploaded by CSFME
CSFME Executive Director, Ed Blount, reviews two books taking opposite sides in the debate about the role short selling played in the financial crisis.  
Fri 11/04/2011 @ 02:33 - Uploaded by CSFME
After the failure of the computer models, the “market posse” assessed the degree of risk that existed for Bear Stearns’s counterparties, and it turned out to be quite accurate. This September 2008 article in the RMA Journal by Ed Blount examines what went wrong during the financial crisis, and how market participants were misled and let down by traditional methods of assessing risk.