Regulatory debates about centralized trading assume security design is immune to market structure. We consider a regulator who introduces an exchange to increase liquidity, understanding that security design is endogenous. For a given security, investors would like to trade in a larger market and, for a given market structure, they would like to trade a safer security. We show that financial intermediaries design riskier securities after the exchange is introduced, even when the exchange leads to the origination of safer underlying assets. The results reflect a relative dilution of investor market power and motivate coordinated policies to improve investor welfare.

关于集中交易的监管辩论假设证券设计不受市场结构的影响。我们考虑引入交易所以增加流动性的监管机构，了解安全设计是内生的。对于给定的证券，投资者希望在更大的市场进行交易，对于给定的市场结构，他们希望交易更安全的证券。我们表明，金融中介机构在引入交易所后设计风险更高的证券，即使交易所导致更安全的基础资产的产生。结果反映了投资者市场力量的相对稀释，并激发了协调政策以改善投资者福利。