I am an Associate Professor of Finance at Warwick Business School of the University of Warwick.
I am a member of the Finance Theory Group.
My research interests include Financial Intermediation, Market Microstructure and FinTech.
I hold Ph.D. in Finance from the Wharton School of the University of Pennsylvania and MA in Economics from New Economic School.
E-mail: ruslan.sverchkov@wbs.ac.uk
Utility Tokens as a Commitment to Competition with Itay Goldstein and Deeksha Gupta.
Journal of Finance 79, December 2024, pp. 4197-4246
Abstract
We show that utility tokens can limit the rent-seeking activities of two-sided platforms with market power while preserving efficiency gains due to network effects. We model platforms where buyers and sellers can meet to exchange services. Tokens serve as the sole medium of exchange on the platform and can be traded in a secondary market. Tokenizing a platform commits a firm to give up monopolistic rents associated with the control of the platform leading to long-run competitive prices. We show how the threat of entrants can incentivize developers to tokenize and discuss cases where regulation is needed to enforce tokenization.
To Pool or Not to Pool? Security Design in OTC Markets with Vincent Glode and Christian C. Opp.
Journal of Financial Economics 145(2), August 2022, pp. 508-526
Abstract
We study security issuers' decision whether to pool assets when facing counterparties endowed with market power, as is common in over-the-counter markets. Our analysis reveals how buyers' market power may render the pooling of assets suboptimal — both privately and socially — in particular, when the potential gains from trade are large. Pooling assets then reduces the elasticity of trade volume in the relevant part of the payoff distribution, exacerbating inefficient rationing associated with the exercise of buyers' market power. Our analysis sheds light on the determinants of asset-backed securities issuance, including regulatory reforms affecting financial institutions' liquidity.
Incentives to Lose: Disclosure of Cover Bids in OTC Markets with Andrey Ordin.
Abstract
We study incentives for post-trade information disclosure in the over-the-counter financial markets. In a setting where execution prices alone do not fully capture the value of the traded assets, we model decisions of investors to hide or reveal information embedded in unexecuted offers. Our model explains why investors, requesting quotes from multiple dealers in the corporate bond market, might choose to conceal the runner-up offer — the cover — from the winning dealer even though the increased informational opacity decreases dealers' incentives to win the trade and worsens their quotes. Investors conceal covers if they trade frequently, gains from trade are high, or uncertainty about bond values is low. We discuss the implications for market liquidity, fragmentation, and the design of electronic RFQ platforms.
An Economic Model of the L1-L2 Interaction with Campbell R. Harvey and Fahad Saleh.
Abstract
We identify a credible economic scenario in which the value of a native Layer-1 cryptoasset vanishes over time and discuss ways to avoid this in an economic model of the interaction between a Layer-1 (L1) blockchain and an associated Layer-2 (L2). These results arise when the L2 becomes sufficiently attractive for investment relative to the L1, a situation that would occur if developers focus exclusively on improving the L2s while ignoring the L1. Crucially, our results establish that, even if the L2s are intended as the primary vehicle for scaling, developers must nevertheless continue to improve the L1 to avoid an adverse outcome for the L1.
Selling to Investor Network: Allocations in the Primary Corporate Bond Market.
Abstract
I develop a model of the primary market for corporate bonds, in which an issuer optimally chooses an issuance price and allocations to investors based on their trading connections in the secondary over-the-counter market. Expected secondary market liquidity, which depends on the structure of the trading network in this market, determines investors' demands in the primary market and, in turn, the issuer's revenues. I show that trading by less connected investors has a relatively high negative impact on expected secondary market liquidity and disproportionately reduces the demands of all investors in the primary market. As a result, the issuer can increase her profits by restricting allocations of new bonds only to more connected investors. This explains the commonly observed exclusion of small institutional investors from the primary market, which is often coupled with seemingly underpriced bonds.
Bidder Disclosure in Informal Security Auctions.
Abstract
This paper studies verifiable disclosure by bidders in a security auction, in which a seller does not commit to any particular auction rule and chooses the winner based on submitted bids. Unlike in the standard cash auctions where a bid is fully informative about the payment to the seller, in an equity auction, the information about the payment is only determined in the equilibrium and disclosure along with a bid can change the seller's inference. I show that bidders prefer to disclose their private values, which lowers the seller's revenue and makes the commitment to shut down communication valuable. Instances where the seller still prefers to know about bidders' values can be explained in an extended model with learning.