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Cross-Border Securities Clearing and Settlement Infrastructure in the European Union as a Prerequisite to Financial Markets Integration: Challenges and Perspectives

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  • de Carvalho, Cynthia Hirata

Abstract

The importance of an efficient securities clearing and settlement system lies on the safer transfer of ownership of assets against payment. Such a system must be developed in a way to minimize the risks involved on securities transactions, and it must still offer lower costs, which do not hinder the intention to acquire or dispose securities. The cross-border securities clearing and settlement transactions within Europe, especially equities transactions, are still much higher and riskier than if cleared and settled domestically. The fragmented structure of local securities depositories is hindering the integration of financial markets in Europe, because investors are not stimulated to enjoy opportunities cross-border. Thus a smoothly functioning integrated infrastructure for clearing and settlement within the European Union is a precondition to further developments of the single financial market. The immediate benefits of financial integration in Europe are economic growth. Benefits under the investors' perspective are higher risk-adjusted returns on savings, better position to diversify portfolio, as well as higher liquidity and competition in the capital markets. On the other hand, corporations would also be favored with better access to financing capital, and competition would force financial intermediates to offer a wider range of financial products at lower prices.

Suggested Citation

  • de Carvalho, Cynthia Hirata, 2004. "Cross-Border Securities Clearing and Settlement Infrastructure in the European Union as a Prerequisite to Financial Markets Integration: Challenges and Perspectives," HWWA Discussion Papers 287, Hamburg Institute of International Economics (HWWA).
    • Handle: RePEc:zbw:hwwadp:26138
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    File URL: https://www.econstor.eu/bitstream/10419/19259/1/287.pdf
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    Citations

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    Cited by:

    1. Alves, Paulo & Ferreira, Miguel, 2008. "Centre Rules the Markets," MPRA Paper 52779, University Library of Munich, Germany, revised 2008.
    2. Ripatti, Kirsi, 2004. "Central counterparty clearing: constructing a framework for evaluation of risks and benefits," Bank of Finland Research Discussion Papers 30/2004, Bank of Finland.
    3. Li, Shaofang & Marinč, Matej, 2016. "Competition in the clearing and settlement industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 40(C), pages 134-162.
    4. Li, Shaofang & Marinč, Matej, 2018. "Economies of scale and scope in financial market infrastructures," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 53(C), pages 17-49.
    5. Panourgias, Nikiforos S., 2015. "Capital markets integration: A sociotechnical study of the development of a cross-border securities settlement system," Technological Forecasting and Social Change, Elsevier, vol. 99(C), pages 317-338.
    6. Chryssa Papathanassiou, 2012. "Central Counterparties and Derivatives," Chapters, in: Kern Alexander & Rahul Dhumale (ed.), Research Handbook on International Financial Regulation, chapter 11, Edward Elgar Publishing.
    7. Ekaterina Dorodnykh, 2013. "What Drives Stock Exchange Integration?," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(2), pages 47-79, September.

    More about this item

    Keywords

    Securities settlement systems; settlement designs; models for consolidation of depository institutions;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F30 - International Economics - - International Finance - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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