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Analyzing the Economics of Financial Market Infrastructures

Book Description

The prosperity and stability of any economic structure is reliant upon a foundation of secure systems that regulate the movement of money across the globe. These structures have become an integral part of contemporary society by reducing monetary risk and increasing financial security. Analyzing the Economics of Financial Market Infrastructures is a pivotal reference source for the latest scholarly research on the current developments in financial systems and how these processes are evolving due to new regulations and technical advances. Featuring extensive coverage on a range of relevant topics on payment systems, central securities depositories, central counterparties, and trade repositories, this book is an essential reference source for professionals in the financial sector, analysts, IT professionals, and academicians concerned with emerging research on financial markets. This book features timely, research-based chapters on a variety of crucial topics including, but not limited to, payment timing, multi-layer networks, transaction simulations, payment system analysis, and regulation of financial marketplaces.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright Page
  4. Book Series
    1. Mission
    2. Coverage
  5. Editorial Advisory Board
  6. List of Reviewers
  7. Foreword
  8. Foreword
  9. Foreword
  10. Preface
  11. Section 1: The Role of Financial Market Infrastructures
    1. Chapter 1: Financial Market Infrastructures
      1. ABSTRACT
      2. WHAT IS THE BACKBONE?
      3. FUNCTIONS IN FINANCE
      4. HISTORICAL EMERGENCE OF FINANCIAL MARKET INFRASTRUCTURES
      5. ECONOMICS AND IMPLICATIONS FOR WELFARE
      6. FUTURE TRENDS FOR FINANCIAL MARKET INFRASTRUCTURES
      7. REFERENCES
      8. ENDNOTES
    2. Chapter 2: The role of Financial Market Infrastructures in Financial Stability
      1. ABSTRACT
      2. INTRODUCTION
      3. THE ROLE OF FINANCIAL MARKET INFRASTRUCTURES IN FINANCIAL MARKETS
      4. THE PRINCIPLES FOR FINANCIAL MARKET INFRASTRUCTURES
      5. THE ROLE OF FINANCIAL AUTHORITIES REGARDING FMIS
      6. CONCLUSIONS AND FUTURE RESEARCH DIRECTIONS
      7. ACKNOWLEDGMENT
      8. REFERENCES
      9. KEY TERMS AND DEFINITIONS
      10. ENDNOTES
      11. APPENDIX: RESPONSIBILITIES OF CENTRAL BANKS, MARKET REGULATORS, AND OTHER RELEVANT AUTHORITIES FOR FINANCIAL MARKET INFRASTRUCTURES
    3. Chapter 3: Regulating Global FMIs
      1. ABSTRACT
      2. INTRODUCTION
      3. OVER-THE COUNTER DERIVATIVES MARKET REFORM: RATIONALE, ACHIEVEMENTS, AND REGULATORY IMPLICATIONS
      4. CONCLUSION
      5. ACKNOWLEDGMENT
      6. REFERENCES
      7. KEY TERMS AND DEFINITIONS
    4. Chapter 4: FMIs – Knights in Shining Armour?
      1. ABSTRACT
      2. INTRODUCTION TO FINANCIAL MARKET INFRASTRUCTURES
      3. DYNAMICS OF FMIs
      4. CONSEQUENCES FOR MARKET PARTICIPANTS
      5. SUMMARY AND OUTLOOK
      6. REFERENCES
      7. APPENDIX: ABBREVIATIONS
  12. Section 2: Tools and Applications for Analyzing Financial Market Infrastructures
    1. Chapter 5: Exploiting Parallelization to Increase the Performance of Payment Systems Simulations
      1. ABSTRACT
      2. INTRODUCTION
      3. SIMULATING PAYMENT SYSTEMS
      4. CONFIGURATION OF EXPERIMENTS
      5. RESULTS
      6. DISCUSSION
      7. CONCLUSION
      8. REFERENCES
    2. Chapter 6: Using FMI Transaction Data in Simulations
      1. ABSTRACT
      2. INTRODUCTION
      3. BACKGROUND
      4. METHODOLOGY
      5. RESULTS
      6. CONCLUSION
      7. REFERENCES
      8. KEY TERMS AND DEFINITIONS
      9. ENDNOTES
      10. APPENDIX: USING THE PAYMENT AND SETTLEMENT SIMULATOR
    3. Chapter 7: A Multi-Layer Network of the Colombian Sovereign Securities Market
      1. ABSTRACT
      2. INTRODUCTION
      3. BACKGROUND
      4. THE DATA SET
      5. METHODOLOGICAL APPROACH
      6. MAIN RESULTS
      7. FUTURE RESEARCH DIRECTIONS
      8. CONCLUSION
      9. REFERENCES
      10. KEY TERMS AND DEFINITIONS
      11. ENDNOTES
    4. Chapter 8: Overconfidence in the Credit Card Market
      1. ABSTRACT
      2. INTRODUCTION
      3. MODEL
      4. COMPUTATIONAL EXPERIMENTS
      5. RESULTS
      6. CONCLUSION AND FUTURE RESEARCH
      7. REFERENCES
      8. KEY TERMS AND DEFINITIONS
      9. Endnotes
    5. Chapter 9: Implementation Aspects of Indicators Related to Payments Timing
      1. ABSTRACT
      2. INTRODUCTION
      3. BACKGROUND
      4. DEFINITION OF INDICATORS
      5. IMPLEMENTATION METHODOLOGY
      6. INDICATOR OUTPUT EVALUATION
      7. CONCLUSION
      8. REFERENCES
      9. ENDNOTES
    6. Chapter 10: Intraday Liquidity Flows within the Financial Market Infrastructures in Mexico
      1. ABSTRACT
      2. INTRODUCTION
      3. BACKGROUND
      4. THE MECHANISM OF LIQUIDITY PROVISION
      5. USE OF EXTERNAL FUNDS VS. INCOMING PAYMENTS IN SPEI®
      6. INTRADAY INTERACTIONS AMONG FINANCIAL MARKET INFRASTRUCTURES UNDER THE LIQUIDITY PROVISION RULES
      7. CONCLUSION AND FUTURE RESEARCH DIRECTIONS
      8. REFERENCES
      9. KEY TERMS AND DEFINITIONS
      10. ENDNOTES
  13. Section 3: Economics of Single Types of Financial Market Infrastructures
    1. Chapter 11: Payment System Analysis
      1. ABSTRACT
      2. INTRODUCTION
      3. PAYMENT SYSTEM ANALYSIS IN THE BROAD SENSE OF THE TERM
      4. ANALYSIS OF SPECIFIC PAYMENT SYSTEMS
      5. USE OF PAYMENT SYSTEM DATA
      6. THE CENTRAL BANK PERSPECTIVE
      7. REFERENCES
      8. ENDNOTES
    2. Chapter 12: Liquidity Saving Mechanisms in Payment Systems and Settlement Liquidity
      1. ABSTRACT
      2. INTRODUCTION
      3. EVOLUTIONAL PROCESS OF PAYMENT SYSTEMS
      4. EXPERIENCE FROM THE BOJ-NET NEXT-GENERATION RTGS PROJECT
      5. CONCLUSION
      6. FUTURE RESEARCH DIRECTIONS
      7. REFERENCES
      8. KEY TERMS AND DEFINITIONS
    3. Chapter 13: CCPs A Challenge for Practical Oversight
      1. ABSTRACT
      2. INTRODUCTION
      3. WHAT DOES THE HISTORICAL EVOLUTION OF CCPS REVEAL ABOUT THEIR FUNCTIONING?
      4. HOW MANY SAFEGUARDS DO CCPS HAVE?
      5. ARE CCPS MORE THAN INSTITUTIONS DESIGNED TO MANAGE COUNTERPARTY RISK?
      6. ARE THERE ANY CHALLENGES REMAINING FOR THE PRACTICAL OVERSIGHT OF CCPS?
      7. REFERENCES
      8. KEY TERMS AND DEFINITIONS
      9. ENDNOTES
    4. Chapter 14: Ownership, Incentives and Regulation of CCP Risks
      1. ABSTRACT
      2. 1. INTRODUCTION
      3. 2. CCPs: RISK CONTROL CHOICES
      4. 3. A MODEL OF CCPS’ RISK CONTROLS
      5. 4. DEVELOPMENTS IN THE POST-TRADE MARKET STRUCTURE
      6. 5. CONCLUSION
      7. REFERENCES
      8. KEY TERMS AND DEFINITIONS
      9. ENDNOTES
      10. APPENDIX
    5. Chapter 15: Mind the Gap Undercollateralization in the Global and Canadian OTCD Markets
      1. ABSTRACT
      2. INTRODUCTION
      3. NOTIONAL VALUES, COLLATERAL IN CIRCULATION AND GROSS CREDIT EXPOSURES
      4. THE COLLATERAL GAP
      5. CONCLUSION AND POLICY IMPLICATIONS
      6. NOTE
      7. REFERENCES
      8. KEY TERMS AND DEFINITIONS
      9. ENDNOTES
    6. Chapter 16: The Changing Role of CSDs in the Post-Trade Industry in Europe
      1. ABSTRACT
      2. 1. INTRODUCTION: THE FUNCTIONING OF CSDs AND THE IMPACT OF CSD REGULATION AND THE IMPLEMENTATION OF T2S
      3. 2. CSDs SERVICES TODAY, INCLUDING SSS FUNCTIONS
      4. 3. CSDs CRITICAL ROLE IN THE POST-TRADE CHAIN AND CROSS BORDER SECURITIES SETTLEMENT
      5. 4. PROGRESS IN IMPROVING THE EFFICIENCY, INTEGRATION, SAFETY AND SOUNDNESS OF THE POST-TRADE INFRASTRUCTURE.
      6. 5. IMPACT OF THE CSD REGULATION AND T2S ON THE ROLE OF CSDs
      7. 6. CONCLUSION
      8. REFERENCES
      9. KEY TERMS AND DEFINITIONS
    7. Chapter 17: Central Securities Depositories and Securities Clearing and Settlement
      1. ABSTRACT
      2. 1. INTRODUCTION
      3. 2. OWNERSHIP OF SECURITIES: A BRIEF HISTORY FROM BEARER BONDS TO BYTES
      4. 3. SETTLING THE TRADE: MANAGING COSTS AND RISKS
      5. 4. POLICY CONCERNS: THE CHALLENGE OF COMPLEXITY
      6. 5. CONCLUSIONS
      7. REFERENCES
      8. KEY TERMS AND DEFINITIONS
      9. ENDNOTES
    8. Chapter 18: Undressing the Global Derivatives Market
      1. ABSTRACT
      2. INTRODUCTION
      3. THE HISTORY
      4. LOOKING AHEAD
      5. LITERATURE REVIEW
      6. NOTE
      7. REFERENCES
      8. ENDNOTES
  14. Compilation of References
  15. About the Contributors