How to regulate a financial market? The impact of the 1893-1898 regulatory reforms on the Paris Bourse

Pierre Hautcoeur, Amir Rezaee () and Angelo Riva
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Amir Rezaee: LEO - Laboratoire d'économie d'Orleans [2008-2011] - UO - Université d'Orléans - CNRS - Centre National de la Recherche Scientifique, EDHEC - EDHEC Business School - UCL - Université catholique de Lille

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Abstract: Theoretical and historical experience suggests a financial centre may either include a single, consolidated and loosely regulated stock exchange attracting all intermediaries and actors, or a variety of exchanges going from strictly regulated to completely unregulated and adapted to the needs of different categories of intermediaries, investors and issuers. Choosing between these two solutions is uneasy because few substantial changes occur at this "meta-regulatory" level. The history of the Paris exchanges provides a good example, since two legal changes in opposite directions occurred in the late 19th century, when Paris was the second financial centre in the world. In 1893, a law threatened the existing two-exchanges equilibrium by diminishing the advantages of the more regulated exchange; in 1898, another law brought them back. We analyse the impact of these two changes on the competition between the exchanges in terms of securities listed, traded volumes and spreads. We conclude competition among exchanges is a delicate matter and efficiency is not always where one would think.

Keywords: regulation; monopoly; microstructure; Paris stock exchange (search for similar items in EconPapers)
Date: 2010-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00547470v1
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Citations: View citations in EconPapers (4)

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Working Paper: How to regulate a financial market? The impact of the 1893-1898 regulatory reforms on the Paris Bourse (2010)
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