Interlinking securities settlement systems - a strategic commitment?

Karlo Kauko

No 427, Working Paper Series from European Central Bank

Abstract: Central securities depositories (CSDs) have opened mutual links, but most of them are seldom used. Why are idle links established? By allowing a foreign CSD to offer services through the link the domestic CSD invites competition. The domestic CSD can determine the cost efficiency of the rival by charging suitable fees, and prevent it from becoming more competitive than the domestic CSD. By inviting the competitor the domestic CSD can commit itself not to charge monopoly fees for secondary market services. This enables the domestic CSD to charge high fees in the primary market without violating investors’ participation constraints.

Keywords: securities settlement systems; central securities depositories; network industries; access pricing (search for similar items in EconPapers)
JEL-codes: G29 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-fin, nep-fmk and nep-net
Date: 2005-01
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Related works:
Journal Article: Interlinking securities settlement systems: A strategic commitment? (2007)
Working Paper: Interlinking securities settlement systems: A strategic commitment? (2003)
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