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Gross or Net Settlement? What Type of Securities Settlement System Works Best?

Author

Listed:
  • Vasile Dedu

    (Academy of Economic Studies, Bucharest)

  • Florian Neagu

    (Romanian National Bank)

  • Romulus Mircea

    (Romanian National Bank)

Abstract

The securities markets are going through material structural changes. Some best practices have been identified in order to deliver safety and efficient securities settlement systems. The paper investigates when gross settlement works better than the net solution. We highlight that, due to the new trends in securities markets characteristics, the safetyness criteria might deliver indifference between using gross or net settlement. The efficiency criterion is the one that makes the difference. We build a model and develop some scenarios in order to assess what type of settlement (gross or net) works best.

Suggested Citation

  • Vasile Dedu & Florian Neagu & Romulus Mircea, 2008. "Gross or Net Settlement? What Type of Securities Settlement System Works Best?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 8(8(525)), pages 73-82, August.
    • Handle: RePEc:agr:journl:v:8(525):y:2008:i:8(525):p:73-82
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