CE26 - Innovation, Travail

Financial Infrastructure: Risks and Regulation – FIRR

Submission summary

The project "Financial Infrastructure: Risks and Regulation" aims at studying the new regulatory framework in the organization of exchanges between financial institutions, called financial infrastructure. Following the financial crisis of 2008, major reforms of the financial market infrastructure have been undertaken worldwide. The goal of these reforms, only partially implemented, is to enhance the stability of the financial system, thereby ensuring a better financing of the economies and preventing taxpayers from paying for the failure of financial institutions. Our main objective is to assess the effectiveness of these regulatory measures on the risk of the financial system.

The G20 in Pittsburgh in 2009 have been pushing for profound changes in the organization of exchanges to correct two shortcomings that might have explained the amplitude of the crisis: first, the exchanges of non-standard assets, such as sub-primes, from the United States to most Western countries through unidentified chains of intermediaries (the so-called shadow banking); second, the complexity and opacity of contracts linking institutions, as those of Lehman Brothers. To limit and better control these arrangements, regulators have required the use of Central Counter-Parties (CCP) for most transactions involving derivative securities, and the mandatory report of all trades on derivatives through companies called Trade Repositories (TRs).

Central counter-parties are thus called to play a crucial role in preventing market disruptions such as Lehman Brothers. Though, a new risk arises: all members of a Central counter-party are exposed to its failure, which could have dramatic effects on markets and macroeconomic stability. While the studies on exchanges are vast, central counter-parties have so far received very limited attention and important aspects of the regulation are still under discussion.

Our project aims to be a significant step in a comprehensive analysis of the impact of the CCPs on the stability of the financial markets and ultimately on the financing of the economy. To achieve our objectives, we need to make progress on three intertwined topics on the financial institutions and infrastructures: their regulation, their strategic behaviours and the systemic risk these generate. To this end, the project is divided into three parts, which study respectively the management of risks by a CCP, the impact of CCPs on the financial institutions and trades and the competition and interdependencies between CCPs and their regulators.

We expect our project to help to design resilient institutions and infrastructures, to promote research in financial economics, and to make accessible to a large audience the functioning of how the financial institutions operate to get a better understanding of the risks they cover and generate.

The project brings together researchers in finance and economics, with both empirical and theoretical expertise.

Project coordinator

Madame GABRIELLE DEMANGE (Paris Jourdan Sciences Economiques)

The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.


Paris Jourdan Sciences Economiques
GREGHEC Groupement de Recherche et d'Etudes en Gestion à HEC

Help of the ANR 248,399 euros
Beginning and duration of the scientific project: March 2019 - 42 Months

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