Trading on Terror?

ArXiv ID: ssrn-4652027 “View on arXiv”

Authors: Unknown

Abstract

Recent scholarship shows that informed traders increasingly disguise trades in economically linked securities such as exchange-traded funds (ETFs). Linking that

Keywords: Informed Trading, Market Microstructure, ETFs, Information Asymmetry, Arbitrage, Equities

Complexity vs Empirical Score

• Math Complexity: 1.5/10
• Empirical Rigor: 8.0/10
• Quadrant: Street Traders
• Why: The paper relies on statistical event studies and rank-order analysis rather than advanced mathematical modeling, placing it at the lower end of math complexity; however, it employs high-quality financial data (FINRA, TASE, SEC) and robust empirical methods (placebo tests, counterfactuals, statistical significance thresholds) to analyze real-world trading patterns, warranting high empirical rigor.

  flowchart TD
    A["Research Goal: How do informed traders disguise<br>trading in securities linked to terror events?"] --> B["Method: Event Study &<br>Multi-Asset Analysis"]
    B --> C["Data: Global Terror Events &<br>Equity/ETF Transaction Data"]
    C --> D["Process: Identify Abnormal Trading<br>in Linked Securities vs. Equities"]
    D --> E["Analysis: Cross-Sectional Regressions<br>controlling for Arbitrage Constraints"]
    E --> F["Finding: Increased informed trading<br>in linked ETFs during terror events"]
    F --> G["Outcome: Displacement of<br>information asymmetry via market linking"]