The reform of European securities settlement systems: Towards an integrated financial market

Marie-Noëlle Calès (), Dominique Chabert, Walid Hichri and Nadège Marchand
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Marie-Noëlle Calès: Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France
Dominique Chabert: Université de Lyon, Lyon F-69007, France

No 1129, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: 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. Under certain conditions, partial adhesion would make prices increase. This configuration appears as a Nash equilibrium. As CSDs are free to adhere to T2S, the ECB might be forced to regulate.

Keywords: Post-trading organisation; securities settlement; depositary services; compatibility (search for similar items in EconPapers)
JEL-codes: D43 G15 G20 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-ban and nep-eec
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The reform of European securities settlement systems: Towards an integrated financial market (2013)
Working Paper: The reform of European securities settlement systems: Towards an integrated financial market (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1129

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