Interlinking securities settlement systems: A strategic commitment?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. by Karlo Kauko Terms of use: Documents in ECB-CFS RESEARCH NETWORK ON CAPITAL MARKETS AND FINANCIAL INTEGRATION IN EUROPEIn 2005 all ECB publications will feature a motif taken from the €50 banknote. WO R K I N G PA P E R S E R I E S N O. 4 2 7 / J A N UA RY 2 0 0 5This paper can be downloaded without charge from http://www.ecb.int or from the Social Science Research Network electronic library at http://ssrn.com/abstract_id=634022. ECB-CFS RESEARCH NETWORK ON CAPITAL MARKETS AND FINANCIAL ECB-CFS Research Network on "Capital Markets and Financial Integration in Europe"This paper is part of the research conducted under the ECB-CFS Research Network on "Capital Markets and Financial Integration in Europe". The Network aims at stimulating top-level and policy-relevant research, significantly contributing to the understanding of the current and future structure and integration of the financial system in Europe and its international linkages with the United States and Japan. After two years of work, the ECB Working Paper Series is issuing a selection of papers from the Network. This selection is covering the priority areas "European bond markets", "European securities settlement systems", "Bank competition and the geographical scope of banking activities", "international portfolio choices and asset market linkages" and "start-up financing markets". It also covers papers addressing the impact of the euro on financing structures and the cost of capital.The Network brings together researchers from academia and from policy institutions. It has been guided by a Steering Committee composed of Franklin Allen (University of Pennsylvania), Giancarlo Corsetti (European University Institute), Jean-Pierre Danthine (University of Lausanne), Vítor Gaspar (ECB), Philipp Hartmann (ECB), Jan Pieter Krahnen (Center for Financial Studies), Marco Pagano (University of Napoli "Federico II") and Axel Weber (CFS). Mario Roberto Billi, Bernd Kaltenhäuser (both CFS), Simone Manganelli and Cyril Monnet (both ECB) supported the Steering Committee in its work. Jutta Heeg (CFS) and Sabine Wiedemann (ECB) provided administrative assistance in collaboration with staff of National Central Banks acting as hosts of Network events. Further information about the Network can be found at http://www.eu-financial-system.org.The joint ECB-CFS Research Network on "Capital Markets and Financial Integration in Europe" aims at promoting high quality research. The Network as such does not express any vie...

Guess what: It’s the settlements! Vertical integration as a barrier to efficient exchange consolidation

“…On this aspect of integration, see also Kauko (2003) for a related paper. 4 On cross-listing and competition between exchanges, see also the recent papers by Shy and Tarkka (2001) and Santos and Scheinkman (2001). directly through strategic variables such as the choice of settlement technology or attracting more corporations to list on the exchange.…”

Raising rival's costs in the securities settlement industry

“…The main reason is that the CSD can raise the costs of the custodian bank without raising the costs of its other customers in the following way: 9 The CSD can increase p C and simultaneously decrease q C by the same amount. The costs of investor banks with the CSD remain unchanged since these banks have one account with the CSD and want to have only one trade settled.…”

“…However, there are only a few research papers on the securities settlement industry. Kauko (2002Kauko ( , 2003 concentrates on the competition between two CSDs. These paper appears to be more in line with the above described second branch of literature on network industries.…”

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

“…We explore consis-15 See, for example, Committee of European Securities Regulators and European Central Bank (2004), Committee on Payment and Settlement Systems and International Organization of Securities Commissions (2001), Deutsche Bö rse Group (2005), and European Shadow Financial Regulatory Committee (2001). 16 See, for example, Economides (1993), Kö ppl and Monnet (2007), Kahn et al (2003), Kauko (2007), and Tapking and Yang (2006). 17 See, for example, Hasan and Malkamäki (2001), Hasan and Schmiedel (2003) and Schmiedel et al (2006).…”