How to Regulate a Financial Market? The Impact of the 1893-1898 Regulatory Reforms on the Paris Bourse

33 Pages Posted: 28 Jan 2010

See all articles by Pierre Cyrille Hautcoeur

Pierre Cyrille Hautcoeur

Paris School of Economics (PSE)

Amir Rezaee

EDHEC Business School; University of Orleans - Laboratoire d'économie d'Orléans

Angelo Riva

European Business School Paris

Date Written: January 27, 2010

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 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: Paris, Stock Exchange, Microstructures, Reforms, Regulation, Monopoly, Spreads

JEL Classification: G14, G18, G24, N13, N23, N43

Suggested Citation

Hautcoeur, Pierre Cyrille and Rezaee, Amir and Riva, Angelo, How to Regulate a Financial Market? The Impact of the 1893-1898 Regulatory Reforms on the Paris Bourse (January 27, 2010). Available at SSRN: https://ssrn.com/abstract=1543291 or http://dx.doi.org/10.2139/ssrn.1543291

Pierre Cyrille Hautcoeur (Contact Author)

Paris School of Economics (PSE) ( email )

48 bd JOURDAN
Paris, 75014 75014
France

Amir Rezaee

EDHEC Business School ( email )

France

University of Orleans - Laboratoire d'économie d'Orléans ( email )

Rue de Blois BP6739
Rue de Blois
Orléans cedex 2, Centre 45067
France

Angelo Riva

European Business School Paris ( email )

37/39 Boulevard Murat
Paris, 75016
France

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