Global vs. continental financial market infrastructures: a cross-jurisdictional PLS-SEM multi-group analysis of transaction cost economics

Purpose- This study examines how transaction costs arise and differ across Global and Continental financial market infrastructures (FMIs) by applying a cross-jurisdictional Transaction Cost Economics (TCE) framework. Motivated by regulatory and technological transformation following MiFID II/MiFIR, the research analyzes whether the structural determinants of transaction costs vary between internationally integrated stock exchange groups and regionally focused market operators. The study employs Partial Least Squares Structural Equation Modeling (PLS-SEM) combined with permutation-based Multi-Group Analysis (MGA) to evaluate how infrastructure transactions, market economics, and infrastructure operations interact in shaping transaction cost outcomes. Methodology- Two anonymized datasets were constructed from audited financial statements, trading statistics, historical listing archives, and industry factbooks covering 2012–2023. All variables were transformed using natural logarithms to ensure statistical comparability. The PLS-SEM results reveal consistently high explanatory power for both institutional clusters (Global FMIs: R²= 0.995; Continental FMIs: R²= 0.975), confirming that the TCE-FMI model effectively captures structural cost dynamics across jurisdictions. Findings- The MGA findings identify significant cross-group differences in four of the five hypothesized relationships. Global FMIs exhibit markedly lower sensitivity of transaction costs to trading activity and stronger dependence on market economics, indicating greater scalability and stronger integration into international capital flows. Conversely, Continental FMIs remain more volume-driven, with operational structures that are more sensitive to fluctuations in trading intensity. Only the relationship between infrastructure operations and transaction costs shows no significant difference, suggesting a convergent operational cost architecture for personnel, technology, and overhead resources across jurisdictions. Conclusion- Overall, the study demonstrates that regulatory frameworks and institutional scope materially shape the cost architecture of financial markets. Global infrastructures appear to benefit from broader market reach, automation, and technological maturity, while Continental infrastructures retain a more traditional, activity-dependent cost structure. These results extend Transaction Cost Economics to the context of modern digitalized FMIs and provide a replicable methodological design for future cross-jurisdictional research on regulatory transformation and market infrastructure governance. Keywords: transaction cost economics, financial market infrastructures, PLS-SEM, multi-group analysis, MiFID II / MiFIR regulation JEL Codes: G18, G28, D23