The Paris Financial Market in the Nineteenth Century: Complementarities and Competition in Microstructures

28 Pages Posted: 9 Oct 2012

See all articles by Pierre‐Cyrille Hautcoeur

Pierre‐Cyrille Hautcoeur

affiliation not provided to SSRN

Angelo Riva

European Business School Paris

Date Written: November 2012

Abstract

This article sets out to explain why the Paris Bourse was highly successful in the nineteenth century in spite of the supposedly inefficient monopoly of the official market, the Parquet. The literature argues that the official monopoly was sidelined by a free, innovative market known as the Coulisse, but it fails to explain how the Coulisse emerged despite the monopoly and how the two markets persisted alongside each other during the entire century. We provide a detailed history of how these two markets emerged and interacted. The Parquet increasingly developed as a high‐end market, providing security, transparency, and effective settlement‐delivery to unsophisticated investors trading on the spot market. The Coulisse provided liquidity, immediacy, and opacity to professional investors trading mostly forward. In line with recent theoretical developments, we argue that the juxtaposition of heterogeneous organizations had important virtues for market participants, since it allowed the exchanges to specialize in different investors and services and made the exchanges complementary to each other. We demonstrate our claim by looking at both the formal rules and the actual functioning of the Parquet, drawing on its archives which we have recently classified.

Suggested Citation

Hautcoeur, Pierre‐Cyrille and Riva, Angelo, The Paris Financial Market in the Nineteenth Century: Complementarities and Competition in Microstructures (November 2012). The Economic History Review, Vol. 65, Issue 4, pp. 1326-1353, 2012, Available at SSRN: https://ssrn.com/abstract=2159045 or http://dx.doi.org/10.1111/j.1468-0289.2011.00632.x

Pierre‐Cyrille Hautcoeur (Contact Author)

affiliation not provided to SSRN

No Address Available

Angelo Riva

European Business School Paris ( email )

37/39 Boulevard Murat
Paris, 75016
France

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