Efficient Systems for the Securities Transaction Industry- A Framework for the European Union (original) (raw)

Settling for Efficiency- A Framework for the European Securities Transaction Industry ∗

2005

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. JEL Classification: F 36, G 28, G 34, L22, P 51

The Reform of European Securities Settlement Systems: Towards an Integrated Financial Market

SSRN Electronic Journal, 2000

The European Central Bank (ECB) will offer to banks in 2013 an european shared platform for securities settlement, named TARGET 2 Securities (T2S), in order to open the national financial markets. The financial crisis did not change the ECB agenda. This paper develops a spatial competition model to understand the impact of this new organisation on european post-trading services. We analyse the incentives of the Central Securities Depositaries (CSD) to move to T2S when they become competitors in the market for settlement services and remain in a monopoly position for depository services. Settlement and depository services are complementary goods, because banks have to pay for these two services to buy or sell a security. We show that such a reform should induce a decrease in the settlement price and more generally in post-trading prices, but that prices depend strongly on market organisation.

Standard Setting and Competition in Securities Settlement

SSRN Electronic Journal, 2000

This paper examines the impact of messaging and technical standards on competition in the supply of securities transaction management services. Two simple switching cost models are used to clarify the impact of standards on barriers to entry and on the incentives to adopt harmonised and simplified securities processing standards. Policy implications are discussed briefly.

Compatibility Between European Securities Settlement Systems: A Spatial Competition Approach

2008

This paper studies the question of Securities Settlement System com- patibility in Europe through price competition in post-trading market. We study the incentives of CSD to migrate to TARGET 2 Secruities when they are competitors in the market for depository. In the spirit of Matutes and Padilla (1994), we construct a stylized model of CSD competition which emphasises the distinctive

Compatibility Between European Securities Settlement Systems: Experimental Evidence

RePEc: Research Papers in Economics, 2012

This paper studies the question of Securities Settlement System compatibility in Europe through price competition in post-trading market. We study the incentives of CSD to migrate to TARGET 2 Secruities when they are competitors in the market for depository. In the spirit of Matutes and Padilla (1994), we construct a stylized model of CSD competition which emphasises the distinctive features of SSS compatibility. We investigate the trade-off between the network and the substitution effects in a setting where, rival CSD first agree on a compatibility regime and then compete in Securities Settlement Services and depository. Therefore, we derive the implications for CSD compatibility of post-trading cost, entry, and banks switching costs. Finally, we investigate the normative implications of our model and draw some policy conclusions.

Essential and Non-essential Measures: Delegation of Powers in EU Securities Regulation

European Law Journal, 2002

This article examines the new regulatory process in the regulation of EU securities markets, as proposed by the Wise Men Committee and welcomed by the Council and the Parliament. The new structure involves inter alia the creation of à comitology' committee and recognises two layers of legislation: essential measures that will be enacted through the normal co-decision process on the one hand, and more detailed technical and`non-essential' measures, which will be decided by the new committee and the Commission, on the other. It is believed that the new structure will respond to the need for speed, eciency and¯exibility in securities regulation. However, the starting point for discussion and the decisive question is how one can distinguish between these two levels of legislative measures. Although the Wise Men Committee does not give sucient guidance on this issue, it is alleged that the success of the proposed regime will heavily depend on the clear de®nition and distinction between essential and non-essential measures. The theoretical exercise of this article involves an analysis of the delegation issues arising from the proposal and the identi®cation of some potentially useful guiding principles and criteria derived from primary and secondary Community legislation and case law as well as from inter-institutional agreements. Its ultimate goal is a proposal for the adoption of common principles, criteria and dividing lines at EU level.

Community Agencies, Competition Law, and ECSB Initiatives on Securities Clearing and Settlement

Yearbook of European Law, 2009

All views expressed are personal and do not represent the views of the ECB or the Eurosystem. Responsibility for any mistakes remains solely mine. uniformity or substituting the free market but rather as seeking to pursue a threefold objective, namely to remove obstacles to integration by cooperating with public authorities and the private sector; to establish standards for securities settlement systems; and to promote the establishment of an integrated regulatory framework; 24 In this context, the ECB has received the support of the other Community institutions and it is notable that, following the launch of the T2S project, the Commission indicated that it would abstain from direct legislative intervention in the area of clearing and settlement. 25