Guess what: it's the settlements!
Cyril Monnet and
Thorsten Koeppl
No 375, Working Paper Series from European Central Bank
Abstract:
Exchanges and other trading platforms are often vertically integrated to carry out trading, clearing and settlement as one operation. We show that such vertical silos can prevent efficiency gains from horizontal consolidation of trading and settlement platforms to be realized. Independent of the gains from such consolidation, when costs of settlement are private information, there is no mechanism that achieves the merger of the vertical silos in a way that trading and settlement are produced efficiently after the merger. Furthermore, we show that such an ex-post efficient merger can always be implemented by delegating the operation of settlement platforms to agents. JEL Classification: C73, G20, G34, L22
Keywords: clearing and settlement; horizontal and vertical integration; mechanism design (search for similar items in EconPapers)
Date: 2004-07
Note: 657474
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Citations: View citations in EconPapers (7)
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Related works:
Working Paper: Guess What: It's The Settlements! (2005) 
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2004375
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