Financial Market Bottlenecks and the 'Openness' Mandate

Financial market infrastructures (“FMIs”), which facilitate the execution of financial transactions, exhibit such strong economies of scale that they are natural monopolies. In each market, production is controlled by a few dominant players. Federal courts have traditionally checked the abuses of natural monopolies under the Sherman Act. Yet recent Supreme Court decisions have reined in the role of antitrust in regulated industries, where administrative bodies set and enforce standards. To this effect, financial regulations require certain FMIs to grant open, nondiscriminatory access to users.This Article argues that weak “openness” regulations must be buttressed by their antitrust counterpart — specifically, the essential facilities doctrine, which enables an excluded user to sue for wrongful denial of access to an FMI.This Article situates FMIs at the intersection of four seismic trends. First, the role of FMIs as a mitigant of systemic risk renders their growth inevitable. Second, open access has become fashionable in the regulation of other natural monopolies (e.g., net neutrality rules), but this approach requires precise standards. Third, essential facilities can supplement weak open access regulations, but the doctrine was nearly dismantled by the Supreme Court a decade ago. Finally, the balance between antitrust and regulation is due to be reset, and the next move will likely come from FMIs