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Settling for efficiency - A framework for the European securities transaction industry

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  • Serifsoy, Baris
  • Wei[ss], Marco

Abstract

Despite a lot of re-structuring and many innovations in recent years, the securities transaction industry in the European Union is still a highly inefficient and inconsistently configured system for cross-border transactions. This paper analyzes the functions performed, the institutions involved and the parameters concerned that shape market and ownership structure in the industry. Of particular interest are microeconomic incentives of the main players that can be in contradiction to social welfare. We develop a framework and analyze three consistent systems for the securities transaction industry in the EU that offer superior efficiency than the current, inefficient arrangement. Some policy advice is given to select the 'best' system for the Single European Financial Market.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 31 (2007)
Issue (Month): 10 (October)
Pages: 3034-3057

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Handle: RePEc:eee:jbfina:v:31:y:2007:i:10:p:3034-3057

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References

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  1. Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
  2. Kahn, Charles M & McAndrews, James & Roberds, William, 2003. " Settlement Risk under Gross and Net Settlement," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(4), pages 591-608, August.
  3. Iftekhar Hasan & Heiko Schmiedel, 2004. "Do networks in the stock exchange industry pay off? European evidence," International Finance 0405002, EconWPA.
  4. Giddy, Ian & Saunders, Anthony & Walter, Ingo, 1996. "Alternative Models for Clearance and Settlement: The Case of the Single European Capital Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 986-1000, November.
  5. de Bandt, Olivier & Hartmann, Philipp, 2000. "Systemic Risk: A Survey," CEPR Discussion Papers 2634, C.E.P.R. Discussion Papers.
  6. Steven Van Cauwenberge, 2003. "New Structure for Clearing and Settlement Systems in the EU," Financial Stability Review, National Bank of Belgium, vol. 1(1), pages 83-103, June.
  7. Patrick Van Cayseele, 2004. "Competition and the Organisation of the Clearing and Settlement Industry," Center for Economic Studies - Discussion papers ces0413, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  8. Ian Giddy & Anthony Saunders & Ingo Walter, 1996. "Alternative models for clearance and settlement: the case of the single European capital market," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 986-1003.
  9. Schmiedel, Heiko & Malkamaki, Markku & Tarkka, Juha, 2006. "Economies of scale and technological development in securities depository and settlement systems," Journal of Banking & Finance, Elsevier, vol. 30(6), pages 1783-1806, June.
  10. Hasan, Iftekhar & Malkamaki, Markku, 2001. "Are expansions cost effective for stock exchanges? A global perspective," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2339-2366, December.
  11. Jens Tapking & Jing Yang, 2004. "Horizontal and vertical integration in securities trading and settlement," Bank of England working papers 245, Bank of England.
  12. Egon Franck & Carola Jungwirth, 2002. "Reconciling investors and donators - The governance structure of open source," Working Papers 0008, University of Zurich, Institute for Strategy and Business Economics (ISU).
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Cited by:
  1. Martin, Antoine & McAndrews, James, 2010. "A study of competing designs for a liquidity-saving mechanism," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1818-1826, August.

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