This chapter discusses the payment and post-trading (i.e. securities clearing and settlement) systems in the EU. Over the past decade, the volume and value of transactions that are processed via these systems have grown tremendously. Stable and efficient payment and post-trading systems have become of great importance for the operation of financial markets and the economy in general. At present, these infrastructures are very fragmented and competition is limited.
This chapter starts by examining the different elements of payment and post-trading systems. A distinction is made between retail and wholesale payment systems. Given the growing importance of card-based retail payment systems, the main focus will be on the set-up of the existing card schemes. Furthermore, the different steps of the post-trading process, which arranges the transfer of ownership and the payment between buyers and sellers in security markets, will be discussed. Finally, the role of central banks in the regulation and oversight of payment and settlement systems will be clarified.
The second part of the chapter gives an overview of the economic features of payment and securities market infrastructures. These infrastructures are characterised by economies of scale and scope, and network externalities. Understanding these characteristics should enable the reader to better comprehend (future) developments within the EU payment and security market infrastructures.