Global Stock Exchanges: The Dawn of a New Era

It has been observed that traditionally stock exchanges have been mutual structures having access to trading floors restricted to some intermediaries, primarily its members. Added to this, the regulatory barriers resulting in regional or national monopolies protected the trading business. Therefore, the mutual structure was the type of organization that assured the protection of monopoly power.In contrast to this structure, the last decade has witnessed a radical change in the organizational structure of stock exchanges in India as well as across the globe. One of the major factors that have led to such transformation has been triggered from the intense competition existing between the exchanges. As an outcome, major stock exchanges across the globe decided to transform themselves from a traditional non-profit model to a "For Profit" model, which came to be known as demutualized stock exchange. Although there is no standard definition of demutualized exchange, one can safely say that a demutualized stock exchange simply means converting a mutualized exchange into a corporate body and running it on a "For profit basis". In addition, a growing number of exchanges have introduced shares of their companies into the stock market they operate; a process commonly termed self-listing that emphasizes at the same time, the for-profit and public nature of the activity. In the mid 90s, the number of World Federation of Exchanges (WFE) members that were for-profit structures was around 10% that has subsequently increased over the years.This book explores the different issues pertaining to demutualization of stock exchanges and various countries across the globe that have undergone demutualisation of their respective stock exchanges.