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Links between securities settlement systems: An oligopoly theoretic approach

Listed author(s):
  • Karlo Kauko

    (Bank of Finland)

This paper presents a duopoly model of the securities settlement industry. Because pooling a large amount of payments can help in using liquidity efficiently, issuers prefer systems where a large number of securities are issued. If the central securities depositories establish a mutual link that enables investors to make transactions with foreign securities, cost savings can be achieved. However, these links may have unexpected effects on CSDs’ pricing, and the issuers’ share of the fee burden can increase substantially. It is not advisable to ban additional fees for using the link, as the CSDs might simply increase the fee for domestic transactions.

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File URL: http://econwpa.repec.org/eps/io/papers/0405/0405003.pdf
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Paper provided by EconWPA in its series Industrial Organization with number 0405003.

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Date of creation: 11 May 2004
Handle: RePEc:wpa:wuwpio:0405003
Note: Type of Document - pdf
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Junttila, Juha, 2002. "Forecasting the macroeconomy with current financial market information : Europe and the United States," Research Discussion Papers 2/2002, Bank of Finland.
  2. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
  3. Kaushik Mitra & Seppo Honkapohja, 2004. "Performance of Monetary Policy with Internal Central Bank Forecasting," Royal Holloway, University of London: Discussion Papers in Economics 04/18, Department of Economics, Royal Holloway University of London, revised Jul 2004.
  4. Keloharju, Matti & Malkamäki, Markku & Nyborg, Kjell G. & Rydqvist, Kristian, 2002. "A Descriptive analysis of the finnish treasury bond market 1991-1999," Research Discussion Papers 16/2002, Bank of Finland.
  5. Karlo Kauko, 2004. "Links between securities settlement systems: An oligopoly theoretic approach," Industrial Organization 0405003, EconWPA.
  6. Markku Lanne, 2004. "Nonlinear dynamics of interest rate and inflation," Macroeconomics 0405014, EconWPA.
  7. Maritta Paloviita, 2006. "Inflation Dynamics in the Euro Area and the Role of Expectations," Empirical Economics, Springer, vol. 31(4), pages 847-860, November.
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