The execution, clearing, and settlement of financial transactions are all subject to substantial scale and scope economies which make each of these complementary functions a natural monopoly. Integration of trade, execution, and settlement in an exchange improves efficiency by economizing on...

type="main" <p>The publication of Michael Lewis's has intensified an already contentious debate over high frequency trading (HFT). But the causes that have given rise to HFT are more complicated—and the general economic consequences far more positive—than at least the popular accounts...</p>

Replacement of delivery settlement of futures contracts with cash settlement is frequently proposed to reduce the frequency of market manipulation. This article shows that it is always possible to design a delivery-settled futures contract that is less susceptible to cornering by a large long...

Although there has been extensive research on the economic functions of financial exchanges and the properties of prices determined on exchanges, there has been little research on their organization and governance. The heterogeneity of the suppliers of financial services who are members of...

Manipulation -- the exercise of market power in a futures market -- is a felony, but recent court and regulatory decisions have made conviction of a manipulator problematic. Instead, regulators attempt to prevent manipulation. Deterrence by conviction is more efficient than prevention if...

This article derives securities market macrostructure from microstructural foundations under a variety of assumptions regarding property rights. Because liquidity effectively makes securities trading a network industry, intermediaries can exercise market power by restricting access to the...