(In)efficiencies of current financial market infrastructures: an empirical assessment

• Published in: Schweizerische Zeitschrift für Volkswirtschaft und Statistik Vol. 158; no. 1; pp. 1 - 11
• Main Authors: Guggenheim, Basil, Kraenzlin, Sébastien, Meyer, Christoph
• Format: Journal Article
• Language: English
• Published: Cham Springer International Publishing 01.12.2022; Springer Nature B.V; SpringerOpen
• Subjects: Availability; Central banks; Clearance & settlement; Collateral; Datasets; Delayed; Digital Transformation; Distributed ledger; Distributed ledger technology; Economic crisis; Economics; Economics and Finance; Efficiency; Financial institutions; Financial market; Financial market infrastructure; Infrastructure; International finance; Interoperability; Money markets; Original Article; Secured money market; Securities markets; Statistics; Technology; Transactions; Value chain; Distributed ledger technology; G23; G15; Secured money market; Financial market infrastructure; G21
• ISSN: 2235-6282; 2235-6282
• DOI: 10.1186/s41937-022-00098-0

We use unique individual bank-to-bank repo transaction data to empirically assess the efficiency of the existing Swiss financial market infrastructure (FMI) for executing delivery versus payment transactions. This approach enables us to identify its current benefits and drawbacks as well as where new technologies, such as distributed ledger technology, could provide a remedy. We find that the fastest settlement time for repo transactions is 12 s, but that settlements are often delayed by more than 10 min due to the lack of collateral availability. We conclude that the cross-border availability of securities needs to be addressed by either improving interoperability of existing infrastructures or using new technologies.