Competition among Securities Markets

Pierre-Cyrille Hautcoeur (1) , Amir Rezaee (2) , Angelo Riva (3)

1 PSE - Paris School of Economics
2 ISG - ISG International Business School [Paris]
3 EBS Paris - European Business School Paris

We study the causes and the consequences of two regulatory changes affecting the competition between the transparent Parquet and the OTC-like Coulisse markets in Paris at the turn of the 20th century. First, we provide evidence supporting the interest group theory to explain regulatory changes. By using these changes as natural experiments, we show then that competition widens bid-ask spreads while monopoly makes them narrower. These results are in line with recent literature questioning the effects of “dark” competition: a transparent monopoly could be more effective than competition if the latter involves opaque markets.

Mots clés: Spreads; Paris Stock Exchange; Market microstructure; Reforms; Regulation; Monopoly

Domaines: Economies et finances

Pierre-Cyrille Hautcoeur, Amir Rezaee, Angelo Riva. Competition among Securities Markets: Stock Exchange Industry Regulation in the Paris Financial Center at the Turn of the Twentieth Century. 2018. ⟨halshs-01863942⟩