Market Infrastructure

Market infrastructure entities are the plumbing of capitalism—organizations that enable transactions without themselves transacting. Exchanges match buyers and sellers. Clearinghouses guarantee settlement. Rating agencies assess creditworthiness. Payment systems move money. Without this infrastructure, markets would be bilateral haggling. The biological parallel is the circulatory system. Just as blood vessels enable oxygen and nutrients to reach every cell without the heart knowing which cell needs what, market infrastructure enables capital to reach every opportunity without the infrastructure knowing which investment is optimal. The infrastructure doesn't make decisions; it enables decisions. The key characteristic is network centrality. Market infrastructure sits at the center of financial networks, seeing every transaction, knowing every participant. This position creates power (information advantages, pricing power) and responsibility (systemic risk, fair access). Infrastructure failures cascade through the entire system—a clearinghouse default or exchange outage affects everyone. The entities in this category include securities exchanges, clearinghouses, rating agencies, and payment systems. Some are for-profit (most exchanges now); others are cooperative utilities (SWIFT, DTCC). Some have explicit regulatory status; others derive power from market position. Their common feature: enabling transactions rather than making them. When exploring market infrastructure, look for: systemic importance (what happens if this entity fails?), governance structure (who controls the infrastructure, and for whose benefit?), and access politics (who gets to use the infrastructure, and on what terms?).

The plumbing of capitalism—entities that enable transactions without transacting, sitting at network centers with information and systemic importance.