Securities Market in Transition: Will the European Regulation of CSDs Increase the Competition?

Line Pedersen & Sofie Stenberg Christensen

Student thesis: Master thesis


The aim of this thesis is to analyze the securities market with a focus on VP Securities A/S. The thesis is structured in three main areas: a legal, an economical and an integrated analysis. The legal analysis provides knowledge on the historical development of the securities market in Denmark, with a focus on the Danish Securities Market Act (Lov om værdipapirhandel mv.). Furthermore, the European regulation, CSDR, is examined in combination with the new Danish Capital Market Act (Lov om kapitalmarkeder). VP Securities A/S got the CSD-licence on the 3th of January 2018, and with this licence VP Securities A/S can offer its services across EU Member States. The analysis found that the CSDs in Europe is regulated by the CSDR as well as the Danish Capital Market Act, when operating in Denmark. The CSDR contains a list of requirements, where the main requirement for CSDs in Europe is the CSD-licence. In addition to the analysis of the applicable law in Denmark, the legal analysis provides an overview of the ways that a European CSD can enter the Danish market. Three ways of entering the Danish market are found: entry by the CSD-licence, entry by CSD-links and by the issuers free choice of CSD. The economic analysis defines the relevant market by a SSNIP-test and with a SWOT-analysis the market position of VP Securities A/S are examined. The results of SSNIP-test are a market, which only contains CSD’s in the EU. VP Securities A/S has a number of strong sides and some weaknesses. The most significant strength is obtaining the CSD-licence, which gives them a first-mover advantage. There are several opportunities and threats, that VP Securities A/S should have into consideration. The entry barriers, that exists on the Danish market, are hereafter analyzed, where the primary barrier was found to be the CSD-licence. Together with the CSD-licence, other barriers were found, in which most of them only will exist, until the entering CSD fulfills the requirements in CSDR. As a result thereof, an analysis of the Ansoff Matrix are made, where the optimal growth strategy for VP Securities A/S is determined to be market development. The integrated analysis assesses the effects of the new European regulation, CSDR, with the use of game theory. The sequential entry game is based on VP Securities A/S and a competing CSD, Euroclear Sweden. The focus for entering the Danish market is the issuers free choice of CSD. Under the given assumptions, it is concluded that CSDR will increase competition and results in a market with a Kaldor-Hicks efficient equilibrium.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2018
Number of pages107
SupervisorsPeer Schaumburg-Müller & Caspar Rose