Alternative Models for Clearance and Settlement: The Case of the Single European Capital Market

J. OF MONEY, CREDIT, AND BANKING, November 1996

Posted: 20 Aug 1996

See all articles by Ian Giddy

Ian Giddy

New York University

Anthony Saunders

New York University - Leonard N. Stern School of Business

Ingo Walter

New York University - Leonard N. Stern School of Business; New York University (NYU) - Department of Finance

Abstract

A prerequisite for the development of a viable international capital market - one that allows investors to achieve optimum asset-allocation and corporations to tap pools of capital most efficiently - is a supportive transactions infrastructure comprising the clearance, settlement, payment and custody of cross-border securities transactions. This infrastructure is the "plumbing" of the market, a structure that is composed of many different parts that must operate as a seamless and integrated manner in order to achieve maximum efficiency for the end-users of the market (the ultimate buyers and sellers of securities) and thus promote the basic objective, optimum capital allocation. Blockages and discontinuities in the utilities that comprise the transactions infrastructure make themselves felt in the form of increased transaction costs and possibly erosion of market liquidity and transparency. At present Europe, notably the EU, falls far short of having a functional transactions infrastructure for equity securities, and this will remain an important shortcoming as other dimensions of financial integration proceed and as other markets, notably in the United States, compete for European transaction flows. This paper enumerates these barriers and costs and evaluates prospects for alternative models for a high-performance European approach to this issue.

JEL Classification: G15

Suggested Citation

Giddy, Ian and Saunders, Anthony and Walter, Ingo, Alternative Models for Clearance and Settlement: The Case of the Single European Capital Market. J. OF MONEY, CREDIT, AND BANKING, November 1996, Available at SSRN: https://ssrn.com/abstract=7666

Ian Giddy

New York University ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0704 (Phone)
212-995-4220 (Fax)

Anthony Saunders (Contact Author)

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

Ingo Walter

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY 10012
United States
212-998-0707 (Phone)
212-995-4220 (Fax)

New York University (NYU) - Department of Finance

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

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