Links between securities settlement systems: An oligopoly theoretic approach

Karlo Kauko

No 27/2002, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: This paper presents a duopoly model of the securities settlement industry.Because pooling a large amount of payments can help in using liquidity efficiently, issuers prefer systems where a large number of securities are issued.If the central securities depositories establish a mutual link that enables investors to make transactions with foreign securities, cost savings can be achieved. However, these links may have unexpected effects on CSDs' pricing, and the issuers' share of the fee burden can increase substantially.It is not advisable to ban additional fees for using the link, as the CSDs might simply increase the fee for domestic transactions.

Keywords: oligopoly; securities settlement systems (search for similar items in EconPapers)
JEL-codes: G20 L13 (search for similar items in EconPapers)
Date: 2002
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Journal Article: The links between securities settlement systems: An oligopoly theoretic approach (2004)
Working Paper: Links between securities settlement systems: An oligopoly theoretic approach (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2002_027

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