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Guess what: it's the settlements! Author info | Abstract | Publisher info | Download info | Related research | Statistics Thorsten V. Koeppl () (Department of Economics, Queen's University )
Cyril Monnet () (European Central Bank, DG Research )
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Exchanges and other trading platforms are often vertically integrated to carry out trading, clearing and settlement as one operation. We show that such vertical silos can prevent efficiency gains from horizontal consolidation of trading and settlement platforms to be realized. Independent of the gains from such consolidation, when costs of settlement are private information, there is no mechanism that achieves the merger of the vertical silos in a way that trading and settlement are produced efficiently after the merger. Furthermore, we show that such an ex-post efficient merger can always be implemented by delegating the operation of settlement platforms to agents.
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Paper provided by European Central Bank in its series Working Paper Series with number
375.
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Length: 34 pages
Date of creation: Jul 2004Date of revision:
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Keywords: Clearing and Settlement ; Mechanism Design ; Horizontal and Vertical Integration ; Other versions of this item:
Find related papers by JEL classification: C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games G20 - Financial Economics - - Financial Institutions and Services - - - General G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Baris Serifsoy & Marco Weiß, 2007.
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Bank of England working papers
245, Bank of England.
[Downloadable!]
Other versions:
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Working Paper Series
387, European Central Bank.
[Downloadable!] Tapking, Jens & Yang, Jing, 2006.
"Horizontal and Vertical Integration in Securities Trading and Settlement ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 38(7), pages 1765-1795, October.
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