Abstract

http://ssrn.com/abstract=2046033
 


 



Competition between Clearing Houses on the European Market


Marie-Noëlle Calès


University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Laurent Granier


affiliation not provided to SSRN

Nadege Marchand


Groupe d' Analyse et de Theorie Economique (GATE)

April 1, 2012

GATE Working Paper No. 1206

Abstract:     
For several years, European financial markets have been the place of important mutations. These mutations have hit both stock markets themselves as well as the infrastructures including all necessary services for the transactions on financial securities. Among the market services to which the investors appeal, is the clearing of the orders, the service which allows reducing exchanged flows while guaranteeing their safety. The market of clearing became strongly competitive with the arrival of new Pan European clearing houses. Confronted with aggressive pricing policies, 'incumbent' clearing houses have to adopt new strategies: merger, simple or mutual links of interoperability. We develop a model of industrial organization to appreciate the consequences of these various strategies in terms of price and social welfare. The strategic incentives of clearing houses and their effects on their customers, i.e. investors, are observed by means of a sequential game. We show that the interoperability agreements are never reached at the equilibrium in spite of the fact that the 'European code of good practice' of postmarkets incites them to accept this type of agreements. On the other hand, a merger between incumbent clearing houses can occur under some conditions. The merger is beneficial to these last ones as well as to the investors, but it is unfavorable to the Pan European clearing houses.

Number of Pages in PDF File: 27

Keywords: bundling, clearing house, interoperability, merger, post-market organization

JEL Classification: L10, G15, G20, G34

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Date posted: April 26, 2012  

Suggested Citation

Calès, Marie-Noëlle and Granier, Laurent and Marchand, Nadege, Competition between Clearing Houses on the European Market (April 1, 2012). GATE Working Paper No. 1206. Available at SSRN: http://ssrn.com/abstract=2046033 or http://dx.doi.org/10.2139/ssrn.2046033

Contact Information

Marie-Noëlle Calès (Contact Author)
University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )
93, chemin des Mouilles
Ecully, 69130
France
Laurent Granier
affiliation not provided to SSRN ( email )
Nadege Marchand
Groupe d' Analyse et de Theorie Economique (GATE) ( email )
CNRS UMR 5824
93, chemin des Mouilles - B.P.167
69130 Ecully cedex
France
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