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Pré-Publication, Document De Travail Année : 2015

Banks' shareholding in multilateral trading facilities: A two-sided market perspective

Résumé

The aim of this paper is to account for the observation that banks are both owners and clients of Multilateral Trading Facilities (MTFs) which were created in Europe after the implementation of the Markets in Financial Instruments Directive (MiFID). Using a duopoly model of two-sided markets, we show that banks' participation in MTFs crucially affects their objective function shape, pricing policy and profit. We show that when brokerage and trading activities are particularly important for banks' revenue compared to their profit as MTF operators, some market outcomes may emerge, whereby both MTFs include banks' interest as clients in their objective function. In these situations, although they earn negative profit as shareholders, banks benefit from lower fees as MTF's clients. This finally results in larger global revenue. This may explain why banks are at the origin of the creation of MTFs and why they maintain their stake despite negative profit. JEL codes: G10 G23 G24 L10 L11 L22
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Dates et versions

hal-01193061 , version 1 (04-09-2015)

Identifiants

  • HAL Id : hal-01193061 , version 1

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Delphine Lahet, Anne-Gaël Vaubourg. Banks' shareholding in multilateral trading facilities: A two-sided market perspective. 2015. ⟨hal-01193061⟩
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