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Competition in the Post-Trade Markets: A Network Economic Analysis of the Securities Business

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  • Günter Knieps

Abstract

In order to analyse the role of competition in the post-trade markets a normative network economic analysis of the securities business is provided. The theory of monopolistic bottlenecks constitutes the theoretical reference point for this analysis in order to identify stable network specific market power. It is shown that clearing and settlement are competitive value-added telecommunications services and therefore do not justify ex ante market power regulation. Precondition for competition on the markets for clearing and settlement is non-discriminatory access to the complementary technical regulatory function-the notary function (authenticity, registry, links between competing end custodians). Copyright Springer Science + Business Media, Inc. 2006

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  • Günter Knieps, 2006. "Competition in the Post-Trade Markets: A Network Economic Analysis of the Securities Business," Journal of Industry, Competition and Trade, Springer, vol. 6(1), pages 45-60, March.
    • Handle: RePEc:kap:jincot:v:6:y:2006:i:1:p:45-60
    DOI: 10.1007/s10842-005-5649-x
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    References listed on IDEAS

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    1. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    2. Knieps, Gunter, 1997. "Phasing Out Sector-Specific Regulation in Competitive Telecommunications," Kyklos, Wiley Blackwell, vol. 50(3), pages 325-339.
    3. Gunter Knieps & Ingo Vogelsang, 1982. "The Sustainability Concept under Alternative Behavioral Assumptions," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 234-241, Spring.
    4. Nicholas Economides, 2001. "The Microsoft Antitrust Case," Journal of Industry, Competition and Trade, Springer, vol. 1(1), pages 7-39, March.
    5. 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.
    6. 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.
    7. John C. Panzar & Robert D. Willig, 1977. "Free Entry and the Sustainability of Natural Monopoly," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 1-22, Spring.
    8. Braeutigam, Ronald R & Panzar, John C, 1993. "Effects of the Change from Rate-of-Return to Price-Cap Regulation," American Economic Review, American Economic Association, vol. 83(2), pages 191-198, May.
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    Citations

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    Cited by:

    1. Blankart, Charles B. & Knieps, Günter & Zenhäusern, Patrick, 2007. "Regulation of new markets in telecommunications? Market dynamics and shrinking monopolistic bottlenecks," Discussion Papers 112 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    2. Knieps, Günter & Zenhäusern, Patrick, 2008. "The fallacies of network neutrality regulation," Discussion Papers 115 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    3. Seven Ipek & Cumhur Ekinci, 2022. "Cost efficiency in financial exchanges and post-trade infrastructures: a closer look at integration and product diversification," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 705-743, December.
    4. Knieps, Günter & Zenhäusern, Patrick, 2013. "Regulatory fallacies in global telecommunications: The case of international mobile roaming," 24th European Regional ITS Conference, Florence 2013 88500, International Telecommunications Society (ITS).
    5. Sauer, Stephan & Mercier, Fabien, 2013. "Optimal CSD reshaping towards T2S," Working Paper Series 1549, European Central Bank.
    6. Knieps, Günter, 2014. "Competition and third party access in railroads," Discussion Papers 150, University of Freiburg, Institute for Transport Economics and Regional Policy.
    7. Günter Knieps & Patrick Zenhäusern, 2014. "Regulatory fallacies in global telecommunications: the case of international mobile roaming," International Economics and Economic Policy, Springer, vol. 11(1), pages 63-79, February.
    8. Li, Shaofang & Marinč, Matej, 2016. "Competition in the clearing and settlement industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 40(C), pages 134-162.
    9. Li, Shaofang & Marinč, Matej, 2018. "Economies of scale and scope in financial market infrastructures," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 53(C), pages 17-49.
    10. Richard Oduro & Francis Kwaw Andoh & Samuel Gameli Gadzo, 2022. "Dynamics and Drivers of Competition in the Ghanaian Banking Industry," International Journal of Global Business and Competitiveness, Springer, vol. 17(2), pages 175-191, December.
    11. Knieps, Günter, 2008. "The net neutrality debate and the German communications and competition law," Discussion Papers 120, University of Freiburg, Institute for Transport Economics and Regional Policy.
    12. Siyi Zhu, 2011. "Is there a 'race to the bottom' in central counterparties competition?," DNB Occasional Studies 906, Netherlands Central Bank, Research Department.
    13. Knieps, Günter, 2013. "The evolution of the generalized differentiated services architecture and the changing role of the Internet engineering task force," Discussion Papers 147, University of Freiburg, Institute for Transport Economics and Regional Policy.
    14. Knieps, Günter, 2005. "Competition in the post-trade markets: A network economic analysis of the securities business," Discussion Papers 101 [rev.], University of Freiburg, Institute for Transport Economics and Regional Policy.
    15. Knieps, Günter, 2012. "Competition and the railroads: A European perspective," Discussion Papers 142, University of Freiburg, Institute for Transport Economics and Regional Policy.
    16. Van Cayseele, Patrick & Wuyts, Christophe, 2007. "Cost efficiency in the European securities settlement and depository industry," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 3058-3079, October.
    17. Knieps, Günter & Zenhäusern, Patrick, 2013. "Regulatory fallacies in global telecommunications: The case of international mobile roaming," Discussion Papers 144, University of Freiburg, Institute for Transport Economics and Regional Policy.

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