Canaries in the Coal Mine: How the Rise in Settlement ‘Fails’ Creates Systemic Risk for Financial Firms and Investors
Harold S. Bradley, Robert A. Fawls, Robert E. Litan
Kauffman Foundation, 2 March 2011
Our central conclusion is this: Every fail introduces a cumulative and potentially compounding liquidity risk into the orderly process of settling the $7.5 trillion of security transactions completed each day, which could be especially dangerous during times when financial institutions are short of liquidity (as was true during the financial crisis of 2008).
PDF (18 Pages): Kauffman Canaries in the Coal Mine
