Securities Industry and Exchange Industry: Organization and Value Chain
The securities and exchange industry performs an important function within the financial system. By facilitating the execution of orders it enhances the liquidity of securities markets, and therefore allows the efficient allocation of capital flows to investment opportunities.
KeywordsPrice Discovery Relevant Market Trading Service Security Exchange Primary Market
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- 1.Excellent essays on industrial organization can be found in J. Tirole (1993) The Theory of Industrial Organization (Cambridge: Mit Press)Google Scholar
- and F. M. Scherer and D. Ross (1990) Industrial Market Structure and Economic Performance (Boston, MA: Houghton Mifflin).Google Scholar
- 2.See, for example, A. H. Meltzer (1969) ‘On Efficiency and Regulation of the Securities Industry’ in H. G. Manne (ed.) Economic Policy and the Regulation of Corporate Securities (Washington: American Enterprise Institute for Public Policy Research).Google Scholar
- 12.Owing to the new institutional approach of the firm we know that firms exist because of the cost entailed by market transactions. However, facilitating market transactions is not only a matter of transaction costs. It entails protecting property rights as well, as widely recognized by many economists. See, among others, R. Coase (1988) The Firm, The Market, and the Law, and R. Coase (1992) ‘The Institutional Structure of Production’, American Economic Review, 82, 4. The property right approach with reference to exchanges has been developed with reference to prices although the body of literature on the topic is scarce.Google Scholar
- 14.For a review of the earliest SEC initiatives alongside the consolidation/frag-mentation debate, see Cohen et al. (1986) The Microstructure of Securities Markets (Englewood Cliffs, NJ: Prentice Hall) pp. 150–66.Google Scholar