Last month, LBS hosted the 9th Behavioural Finance and Capital Markets (BFCM) Conference. The conference aims to bring together scholars and practitioners to present state-of-the-art research in the fields of Behavioural Finance, Experimental Finance and Capital Markets/Market Microstructure.
The conference is unique in that it merges academic research with the applied work of the finance industry. The conference continuously looks to identify new emerging fields of research and supports better cooperation and collaboration among researchers and between academia and industry. According to it comes down to this:
“The research we do should not only have academic value but also practical application that impacts the finance industry and hence our society. This conference makes that happen.”Professor Petko Kalev (Founder of the BFCM Conference)
After being welcomed by Dean & Head of LBS Prof Jane Hamilton, Mike Aked from Research Affiliates kicked off with a discussion why Kappa is being a more stable estimate of the skew that exists in financial markets, followed by Nick Wade from Northfield Information Services presenting why getting risk “right” is wrong, explaining how risk and volatility are not being equivalent concepts.
The industry forum discussed “Technological Disruptions in the Finance Industry and the role of Humans”. All panel members, which included Joseph Barbara (ASIC), Kingsley Jones (Jevons Global Pty Ltd), Rick Klink (Paritech) and Alistair Rew (AMP Capital), agreed there is and always will be a very important role for humans.
Keynote speaker Dan diBartolomeo from Northfield Information Services discussed “Robo-Advisers”. Particularly where these automated investment advisers have fallen short and more importantly, a solution. This was followed by a keynote of Professor Nadia Massoud from Melbourne Business School on the use of Artificial Intelligence in sentiment analyses of finance data and recent developments on how to improve sentiment measures.
Several industry doctoral candidates from the RoZetta Institute (formerly CMCRC) also presented their work. They presented on the rise in trading on close, the sensitivity of trading to the cost of information and self-organizing maps and financial applications.
In his presentation titled Harry Potter’s Classroom: The Case for Either ‘Independent Directors’ or ‘Financial Literacy’, Sam Ferraro from Global Founders Funds Management discussed whether Founder-CEO firms exhibit low board independence and if that matters. This was followed by Simon Russell from Behavioural Finance Australia presenting a chapter from his book Behavioural Finance: A guide for financial advisers focusing on the overstated role of financial literacy.
During the conference dinner Professor Peter Bossaerts from University of Melbourne delivered the last keynote of the day. Peter spoke about the relevance of theoretical finance in a world of behavioural finance, emphasising that industry should hire people who know theory. After the keynote, several presenters received best paper awards.
Best Paper Award sponsored by RoZetta Institute
Antonio Gargano, Juan Sotes-Paladino and Patrick Verwijmeren received the Best Paper Award sponsored by RoZetta Institute (Formerly CMCRC-SIRCA), for their paper entitled Out of Sync: Disagreement among Short Sellers and the Correction of Mispricing.
Best Paper Award sponsored by Amery Partners
Oleg Chuprinin and Arseny Gorbenko received the Best Paper Award sponsored by Amery Partners Pty. Ltd. for their paper entitled Rationally Neglected Stocks.
On the second day there were parallel sessions where scholars presented their research in one of the following streams:
- To Be or Not to Be in Cryptocurrencies Markets or in Markets with Divergence of Opinion, Excess Price Volatility and Excessive Portfolio Turnover
- Overconfidence, Emotions, Moods and Sentiment in Financial Markets
- Asymmetric Information, Unobserved Heterogeneity and Market-wide Events
The keynote was delivered by Professor Elena Asparouhova – The Francis A. Madsen Professor of Finance at the David Eccles School of Business at the University of Utah. Her talk focused on human-robot interaction in financial markets. Elena gave a brief overview of social science experiments, starting with the Santa Fe competition in 1990 to current experiments that examine if and how technology exacerbates or ameliorates human errors in financial markets.
There was also the chance for doctoral candidates to present their research topics. Candidates came from Australian universities such as La Trobe University, Monash University and University of New South Wales, but there were also candidates from international universities such as the University of Utah and the University of Auckland.
BFCM in the news
Several news articles were published about research presented at the conference:
- The science that shows it’s hard to beat the market by Financial Review on the 30th of October.
- Lessons for super funds from the man who hunted Madoff by Financial Review on the 31st of October.
- Fiscal robo-advisor a welcome dinner guest by The Australian on the 31st of October (requires subscription – accessible through LTU library).
If you have any questions about the conference, please contact Prof Petko Kalev (P.Kalev@latrobe.edu.au).