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The European Securities Trading and Post-trading (Clearing and Settlement) Industries have recently experienced a vast movement of consolidation. This was encouraged by the European Commission, seeking to establish a single market for the trade of financialsecurities across the European Union, and reduce the cost of cross-border transactions. For t...
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Citations
... He finds that the welfare effect of a vertical integration depends on the tradeoff between efficiency gains and lower competition at the custodian level (see also Kauko, 2007). Cherbonnier and Rochet (2010) conclude that vertical integration spurs the need for regulation of access pricing, and this introduces new inefficiencies due to the incentives of the ICSD to hide cost information. ...
This article empirically analyzes the competitive landscape within the clearing and settlement industry. Using panel data for forty-six clearing and settlement institutions from twenty-three countries, we confirm that competition between clearing and settlement institutions is limited. We show that competition increases with institutional size, with technological development, and after horizontal mergers, but not after vertical mergers. In addition, we find that competition in clearing and settlement is higher in the US than in Europe and was higher during the global financial crisis compared to normal times.
... He finds that the welfare effect of a vertical integration depends on the tradeoff between efficiency gains and lower competition at the custodian level (see also Kauko, 2007). Cherbonnier and Rochet (2010) conclude that vertical integration spurs the need for regulation of access pricing, and this introduces new inefficiencies due to the incentives of the ICSD to hide cost information. ...
This article empirically analyzes the competitive landscape within the clearing and settlement industry. Using panel data for forty-six clearing and settlement institutions from twenty-three countries, we confirm that competition between clearing and settlement institutions is limited. We show that competition increases with institutional size, with technological development, and after horizontal mergers, but not after vertical mergers. In addition, we find that competition in clearing and settlement is higher in the US than in Europe and was higher during the global financial crisis compared to normal times.
This chapter empirically analyzes the competitive landscape within the clearing and settlement industry. Using the panel data of 46 clearing and settlement institutions from 23 countries we confirm that competition between clearing and settlement institutions is limited. We show that competition increases with the institutional size, with technological development and after horizontal mergers but not after vertical mergers. Additionally, we find that competition in clearing and settlement is higher in the U.S. than in Europe and higher during the global financial crisis compared to normal times.
This article confirms the existence of substantial economies of scale in trading and post-trading financial market infrastructures (FMI), using the panel data of thirty stock exchanges, twenty-nine clearing houses, and twenty-three central securities depositories from thirty-six countries. We show that economies of scale are positively related to size and vertical and horizontal integration of FMI providers. Economies of scale are significantly higher in North America than in other regions. When analyzing economies of scope, we show that the efficiency of FMI providers increases with vertical (but not horizontal) integration and with a focus on a narrow range of asset classes. We also analyze implications for systemic risk.
