Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 19, 2006 erstellt
Beschreibung:
The main objective of this paper is to try to clarify the likely consequences of settlement internalisation by custodian banks with respect to the competitive nature of the (clearing and) settlement industry, regardless of the extent of internalisation that is actually carried out.The intuition of the model presented in this paper is based on the assumption that the CSD knows the investors' final demand of (clearing and) settlement services, even though it is only faced with a fraction of such demand: the investors' final demand that is not internalised by custodians. In consequence, the CSD's monopoly power is not constrained by the possibility of custodian banks internalising part of the (clearing and) settlement activity.The model structurally differentiates the (clearing and) settlement activity of the CSD from that of custodians. The difference between the (clearing and) settlement activity of the CSD and that of custodians refers to the fact that the (clearing and) settlement activity of the CSD is the highest or primary level where settlement can be achieved. To the extent that the probability of settlement internalisation is less than one, not all settlements are internalised. As a consequence of this, the CSD can adjust its price to take into consideration the level of settlement internalisation, making it irrelevant from the point of view of its level of profits.An updated version of this paper has been published in The Journal of Financial Transformation-Securities, Vol. 20, September 2007