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DEMUTUALIZATION OF STOCK EXCHANGE

FINAL DRAFT SUBMITTED IN FULFILLMENT OF PROJECT FOR THE SUBJECT

LAW RELATING TO FINANCE AND CORPORATE FINANCE, SECURITIES AND


COMPETITION

BY

SANU KUMAR

(Roll No.- 962, 9th Semester, B.A LL.B (Hons.))

SUBMITTED TO

Dr. Ajay Kumar

ON

NOVEMBER 9, 2017

CHANAKYA NATIONAL LAW UNIVERSITY

PATNA
ACKNOWLEDGEMENT
The present project on “Law Relating to Finance and Corporate Finance, Securities and
Competition” has been able to get its final shape with the support and help of people from various
quarters. My sincere thanks go to all the members without whom the study could not have come
to its present state. I am proud to acknowledge gratitude to the individuals during my study and
without whom the study may not be completed. I have taken this opportunity to thank those who
genuinely helped me.

With immense pleasure, I express my deepest sense of gratitude to Dr. Ajay Kumar, Faculty for
Law Relating to Finance and Corporate Finance, Securities and Competition, Chanakya National
Law University, Patna for helping me in my project. I am also thankful to the whole Chanakya
National Law University family that provided me all the material I required for the project. Not
to forget thanking to my parents without the co-operation of which completion of this project
would not had been possible.

I have made every effort to acknowledge credits, but I apologies in advance for any omission
that may have inadvertently taken place.

Last but not least I would like to thank Almighty whose blessing helped me to complete the
project.

SANU KUMAR
Table of Contents
ACKNOWLEDGEMENT............................................................................................................ 2

OBJECT OF THE STUDY ........................................................................................................... 4

SCOPE OF THE STUDY ............................................................................................................ 4

RESEARCH METHODOLOGY ................................................................................................... 4

INTRODUCTION ..................................................................................................................... 5

HISTORICAL BACKGROUND .................................................................................................... 8

IMPACT ON DEMUTUALISATION .......................................................................................... 12

INDIAN SCENARIO
 ............................................................................................................ 15

CONCLUSION ....................................................................................................................... 18

BIBLIOGRAPHY .................................................................................................................... 19
OBJECT OF THE STUDY
The prime objective of the researcher for doing this research work is to perform a comprehensive
study of the topic and find out the procedure for Demutualization of stock exchange.

SCOPE OF THE STUDY


The scope of the research is to determine the intricacies involved in the Demutualization of stock
exchange. and advantages and disadvantages of the same.

RESEARCH METHODOLOGY
Doctrinal method of research comprising accumulation of information from books, online
materials and data, newspaper and magazine articles etc. have been used in this project.
INTRODUCTION

The Indian stock exchanges were mostly broker dominated, and the concept of governance was
not given the due importance it deserves. This resulted in erosion of investors’ wealth and
ultimately their confidence in the stock market. Since investors are the backbone of any stock
exchange, it got necessary to infuse a sense of confidence among the investors. That is how the
corporatisation of stock exchanges took place for streamlining the process of corporate
governance. Corporate governance is one of the most pivotal issues associated with
demutualisation of stock exchanges.

On account of recovering markets due to subprime crisis in 2007–2008 and the global recession,
for better corporate management, the corporate governance of the stock market becomes all the
more relevant. This paper highlights the fundamental issues in the demutualisation of these stock
exchanges and their facelift for better governance structure in the said context.

The primary contribution this study seeks to make is in the sphere of corporate governance related
to the process of demutualisation of Indian stock exchanges in this phase of markets rebuilding. It
is hoped that it will improve the investors’ perception about the reliability of stock exchanges and
promote better spirit of trust and governance.

Demutualization has been defined as the conversion of stock exchanges from a mutually owned
organization to a company owned by various entities including the public1. The first stock
exchange to demutualize was the Stockholm Stock Exchange in 1993, and since then, a number of
stock exchanges around the world have been demutualizing. The changing landscape in the
world’s capital and financial markets arising from globalization has been cited as the reason for
demutualization2. Schmiedel3 reveals that due to recent technology improvements and changes in

1
Shahid A (2002) Small Stock Markets in a Globalized World. Project Syndicate: An Association of Newspapers
around the World. 

2
Aggarwal R (2002) Demutualization and Corporate Governance of Stock Exchanges. Journal of Applied Corporate
Finance 15: 106-113. 

3
Schmiedel H (2002) Total factor productivity growth in European stock exchanges: a non-parametric frontier
approach. Bank of Finland discussion paper 11. 

the competitive environment, new opportunities and threats have emerged and stock exchanges
have responded by changing their ownership form.

However, the pace of demutualization has been very slow in emerging markets as compared to
developed economies. By 2005, about 21 exchanges in developed markets had demutualized,
representing almost 40% of the World Federation of Exchanges as compared to only 5 exchanges
in emerging markets4.

Studies on stock market development in emerging markets have recommended demutualization


(alongside automation and other measures) as an important step for market development and
enhancement5. The governance effects of demutualization however have attracted much of the
attention of both academic and policy researchers, resulting in very little published research on the
impact of demutualization on stock market liquidity. The very few studies that have paid some
attention to the impact of demutualization on exchange liquidity include and somewhat indirectly,
Mishkin (2001). Stock market liquidity is well-documented as a significant driver of economic
growth6 and in view of the modern trend towards demutualization, it is important to understand
how demutualization affects stock market liquidity.

Stock exchanges, traditionally, have been organised as not-for-profit mutual associations owned
by members, though the legal form differs across countries. A mutual organisation, a remnant of
the physical nature of the exchange, owes its origin to the manner in which trading in stocks started.

Ever since stock trading commenced, till the advent of automation, an exchange implied a physical
location. Members met at a specific place and at specified times to trade with one another. With it
came the need to impose restrictions on access to the trading floor, given the limitations of space.
This evolved into a system of seats forthright to trade, which was essentially a system of self
selection based on high initial and yearly membership fees. Organisational profit making was

4
World Federation of Exchanges (WFE) 2005. Annual Report and Statistics. 

5
Otchere I (2008) Stock exchange self-listing and value effects. Journal of Corporate Finance 926-953. 

6
Levine R, Zervos S (1998) Stock Markets, Banks, and Economic Growth. American Economic Review 88: 537–
558. 

never the motive; the exchange required funds only to the extent of meeting its expenses. Any
surplus made by the exchange resulted in reduced access fees for members.

The accepted norms of behaviour of members and their self imposed rules for trading governed
the markets. Members were responsible for their conduct with one another, with users of the
exchange and other stakeholders. With securities law in place, the concept of self-regulation under
regulatory oversight emerged.

Stock exchanges fulfil several roles in the economy. Some of the various roles that stock exchanges
assume are; raising capital for businesses, mobilizing savings for investments, facilitating
company growth, redistribution of wealth, corporate governance, creating investment
opportunities for small investors and raising capital for the government to enable for carrying out
development projects. Therefore, the movement of share prices and in general the stock indexes
can be a good indicator of the general trend in the economy7.

Stock exchanges undertake a variety of responsibilities to assume the above mentioned roles.
These include; devising rules of trading and monitoring them, setting conditions for listing or
admission to trading, adopting and enforcing rules for the conduct of members of the exchange,
setting qualification and financial standards for securities industry professionals, conducting
surveillance of the market and its participants and monitoring and regulating the daily trading and
the operation of the market to ensure its integrity 8.

7
Role of the Exchange in the Economy, Nairobi Stock Exchange.

8
International Organization of Securities Commission (IOSCO) Discussion Paper, 2000, p.4
HISTORICAL BACKGROUND
Prior to 1990s, stock exchanges all over the world used to operate as mutual organizations. Early
1990s, stock exchanges started to undertake major organizational and operational changes. One of
the most noted changes was the trend toward demutualization.

Demutualization can be defined as the ‘process of continuing an organization from its mutual
ownership structure to a share ownership structure. This process often entails, first obtaining the
appropriate regulatory and governmental consents, then converting membership rights into shares,
which may be followed by public issuance and listing of the exchange, with immediate or eventual
freely tradable shares9. The conversion was not identical among stock exchanges. In some cases,
such as the Italian Borse – the stock exchange transformed from a government-owned utility
through the implementation of the Investment Services Directive (1993/22) that allowed for

privatizing the exchange, transforming it into a company that can gradually be listed
 on the

exchange. In other cases - such as London Stock Exchange (LSE), the stock exchange was not a
government-owned entity and transformed into a limited company. Access to the stock exchange
is not anymore restricted to membership10.

The trend toward demutualization started in 1993 by the Stockholm Stock Exchange. It was
followed by several others, including the Helsinki Stock Exchange in 1995, the Copenhagen
Exchange in 1996, the Amsterdam Exchange in 1997, the Australian Exchange in 1998, and the
Toronto, Hong Kong and London Stock Exchanges in 2000. 2005 figures show that about 60% of
the World Federation of Exchanges’ (WFE) members were either demutualized or listed11.

The remarkable change in the ownership and organizational structure of the demutualized stock
exchanges was mainly motivated by some intense global competition and advances in technology.
Decisions to demutualization, is based in essence on the recognition that the old member-owned
organizational structure fails to provide the flexibility and the financing needed to compete in the
global competitive environment. Demutualized stock exchanges are driven by profit-seeking

9
Hughes and Zargar, 2006, p: 6-7
10
Di Noia, 1998, p. 22
11
WFE Cost and Revenue Survey 2005, 2006, p.9
investors who want to produce better financed organizations with greater ability to respond quickly
to the fast changing market place. Some of the typical sources of revenues such as, listing fees,
membership fees become less important. For the demutualized exchanges, transaction fees and
new products and services are more important sources to expand their revenue.

By the end of 2006, the total stock market capitalization of world’s exchanges was $50.6 trillion
of which about 45 percent from Americas, 23 percent from Asia-Pacific and 32 percent from
Europe, Africa and the Middle East. The majority of demutualized and listed exchanges are
concentrated across Americas and Europe. Currently, about 50 per cent of total revenues of
members of World Federation of Exchanges (WFE) are comprised of publicly-listed exchanges.
A small but significant portion of exchanges accounting for 20 per cent of WFE’s total revenue
have demutualized but not listed their shares12. Almost all of the largest stock and derivative
exchanges; measured in terms of capitalization have demutualized and listed their shares in the
last decade13.

Conceptual Issues of Demutualization

‘The concept of ‘demutualized exchanges’ are often wrongly confused with ‘for-profit exchanges
in informal discussions. However, for-profit exchanges are not necessarily demutualized ones.
Many stock exchanges can legally distribute profits to its owners, but they are not demutualized.
The concept of demutualization is related to the separation of ownership and membership when
there is a need to create a complete cultural change within the organization. Thus, the ownership
structure of the stock exchange is central to the definition. There are several researches and
discussion papers have defined the concept of demutualization. The following lines demonstrate
these definitions.

1. - The World Federation of Exchanges (WFE): ‘The demutualization of an exchange is a


process by which a non-profit member-owned organization is transformed into a for-profit

shareholder corporation. Ownership is somewhat open14. 


12
WFE, 2006, p. 26 and 66
13
Aggrawal and Dahiya, 2005, p.3
14
WFE, Cost and Revenue Survey 2005, annex 1, p.37
2. - IOSCO discussion paper on Stock Exchange Demutualization; “the transformation of an
exchange into a for-profit shareholder-owned company is referred to as demutualization”.

In most cases, the demutualized exchange becomes a for-profit enterprise15. 


3. - Abdel Shahid 2002: Demutualization means restructuring the stock exchange and
changing it from a nonprofit organization mutually owned organization by its members
into a profitable company owned by various entities including the public. The shares of the
exchange can then be distributed among members, financial institutions and the public.
Done properly, a change in the status of the exchange could provide the needed capital to

build the marketplace, lower costs to members and better serve investors”16. 


4. - Aggarwal, Reena”, 2002: ‘Demutualization is the process of converting a non- profit,


mutually owned organization to a for-profit, investor-owned corporation. The members of
mutually owned exchanges--that is, broker dealers with “seats” on the exchange--are also
its owners, with all the voting rights conferred by ownership. In contrast, a demutualized
exchange is a limited liability company owned by its shareholders. Trading rights and
ownership can be separated; shareholders provide capital to the exchange and receive
profits, but they need not conduct trading on the exchange. And as discussed later, although
demutualized exchanges will continue to provide many if not most of the same services,
they will have different governance structures in which outside shareholders are

represented by boards of directors’ 


The above-mentioned definitions rest on bringing nonmembers (shareholders) as owners. Selling


ownership stakes to outsiders allow the exchange to raise capital for expansion and technology
investment. More importantly, demutualization enables to reduce the control of intermediaries
over the decision making process. Intermediaries seek to maximize their own profits from trade
intermediation and hinder the ability of the exchange to serve companies and investors with
maximum efficiency. Demutualization helps to expand direct trading access to foreigners or
institutional investors, or to merge with other exchanges. Thus, what is essential to successful

15
IOSCO Discussion paper, 2000, p. 1
16
Abdel Shahid, 2002, p.1
demutualization is to have non-members free to buy equity stakes in the exchange from current
owners and to help reduce demand for services of existing members.

Clearly, there are huge differences in the governance structure among demutualized exchanges. A
demutualized exchange might allow members to freely sell their equity stakes in the exchange to
non-members, but put some limitations to the maximum shareholdings. The demutualized Borsa
Italiana is an one extreme example of this definition, where 90 percent is owned by Italian
intermediaries. At another extreme is OM Stockholm which listed itself and which has a highly
diversified shareholder base including foreigners17.

Forms of Demutualization

A demutualized stock exchange might take different organizational forms. Some exchanges have
demutualized and become public companies listed on their own exchanges. Other exchanges have
demutualized but remained private corporations. Others are subsidiaries of publicly traded holding
companies. Empirical examples include the Australian Stock Exchange which is a public company
listed on its own exchange, the Amsterdam Exchange and the Toronto Stock Exchange which are
presently private corporations, the London Stock Exchange arranged for an off-market trading
facility for its shares and the Pacific Exchange in the United States converted its equity business
into a wholly owned subsidiary of the exchange and the OM Stockholms börsen AB is a wholly
owned subsidiary of a listed company18.

Motives/Factors for Demutualization

In business world, a change in the ownership structure usually reflects a change in the strategy
adopted by the firm to respond to certain changes. Changes in the ownership and organizational
structures of stock exchanges mirror major changes in their business environment such as, the
globalization, the rise of global competition and technological advances. Decisions by stock
exchanges to demutualize are undertaken when the existing member-owned structure fails to
provide the flexibility and financing needed to respond to today’s competitive environment. For-

17
Supra 15.
18
IOSCO 2000, p. 1
profit stock exchanges run by for-profit investors are expected to provide better financing, allow
more flexible decisions mechanism and to expand into new businesses19.

IMPACT ON DEMUTUALISATION
The Impact of Technology

Advances in telecommunications, and the growth of the Internet and wireless communication
technologies are dramatically changing the structure and nature of financial services. Internet and
related technologies have evolved as new different means for providing financial services. Trading
is moving toward electronic platforms that are not attached to a certain location; a centralized
physical location became less important20.

A number of electronic order routing and trading networks have emerged in recent years. These
networks serve as order-driven matching systems for participants seeking anonymity Examples of
such electronic communications networks (ECNs) include Instinet, Island, and Archipelago which
provides since 1997 trading platforms that can match customer orders anonymously without the
interference of middlemen. Some ECNs like Island have succeeded to obtain retail order flow.
ECNs have currently

emerged as a factor of success in Europe as most stock exchanges in Europe are electronic limit
order books. Additionally, recent industry-wide developments suggest that ECNs can even be
consolidated together. The merger between Archipelago and REDIBOOK, and between Instinet
and Island allow for such consolidation21. Other alternative trading systems are emerging around
the world, often with links to existing trading systems. Instinet started as a local inter dealer broker
and dealer but now has automatic routings to several stock exchanges. There is speculation that a
few trading systems will soon allow investors to trade 24 hours a day (Ibid. p.14)

The New electronic systems have lead to lower transactions costs of trading, allowed for better
price determination, and lowered the chance for market manipulation. The new advances in

19
Supra 13.
20
Ibid.
21
aggarwal, 2002, p.10-11.
technology has also facilitated cross-border trading and over time for development of inter-market
trading systems (ITS).

The Impact of Competition

The past two decades have witnessed a remarkable change in the competitive environment facing
exchanges. As mentioned above, technology has both lead to the rise of new competitors such as
ECNs and compelled stock exchanges to set new trading platforms. Traditional functions of the
stock exchange became available from other sources and made investors seek the means that can
provide liquidity more efficiently. As barriers to entry fell, off-floor trading systems started to
compete with the traditional stock exchanges and threaten their revenue base. An example of that
is London’s Stock Exchange Automated Quotation System (SEAQ-I), the screen-based system
trading international stocks which competed with European stock exchanges such as Stockholm,
Amsterdam and Milan. Regulatory barriers were also decreased. For example, in 1993, the
Swedish Government enacted a legislation to end the monopoly of the Stockholm stock exchange.
In the US the Securities and Exchange Commission (SEC) implemented the Order Handling Rules
to allow for greater competition between the Electronic Communication Networks and National
Association or Securities Dealers Automated Quotation System (NASDAQ)22.

With these changes in the competitive environment, the mutual cooperative structure of the stock
exchange corporate governance becomes less appealing. The customer stock exchange relationship
has changed to seek better liquidity and services. Members’ interests become increasingly
divergent and the benefits of the cooperative structure were greatly reduced. Another issue is the
ability of the cooperative structure to raise new capital. Considering the transaction cost point of
view, the cost of organizing the cooperative is greater than the benefits23.

It was initially hard for the traditional mutual stock exchanges to respond to competition. The
mutual governance structure and the heterogeneity nature of members of the stock exchanges
(local market makers, broker dealers, international banks, etc.) made it difficult for them to ignore
their private cost-benefit evaluations and vote for policy change. It was noted that there was an
initial resistance by members of traditional mutual stock exchanges to the introduction of

22
Hazarika, 2005, p.3
23
Mendiola and O’Hara, 2004, p.7
automated trading as it would match the buy and sell orders and reduce their intermediary role.
For example, NASDAQ market makers blocked the incorporation of mandatory price-time priority
in the Super Montage trading system so that they continue matching trades internally24.

But, with these competitive pressures, some members of the stock exchanges realized the need for
the cessation of floor trading and the introduction of electronic auction trading (e.g. Amsterdam in
mid 1990s). Moreover, they started to realize that without a change in the governance structure,
the exchange’s revenues could be eroded. Therefore, they put pressure on local stock exchange
members and forced them to accept demutualization25.

In addition, competition among stock exchanges has also attracted investors. Investors started to
seek the payment of lower commissions, and look for means to handle trades more quickly with
anonymity on placed orders. Thus, the rise of competition between stock exchanges and other
trading systems necessitated that stock exchanges become more efficient in all activities, including
their decision making processes.

Demutualization provides an opportunity for stock exchanges to be more efficient and have
broader access to capital. The new organizational structure of stock exchanges allows maximizing
the residual value of the enterprise, thus benefiting shareholders. Though members may dominate
for sometime, demutualization is likely to end up transferring considerable ownership and decision
making power to outside investors. This means that the decisions that used to be undertaken by
stock exchange members will be replaced by a professional management team motivated by
significant share ownership to increase efficiency and profits.

24
Supra 22.
25
Ibid.
INDIAN SCENARIO


Demutualisation has been experimented in India even before the concept came to be propounded
internationally. The Over The Counter Stock Exchange of India, promoted and incorporated in
1990 by financial institutions as a non profit company under Section 25 of the companies Act26,
was a pioneering attempt in separating ownership and membership of the exchange. The
subsequent setting up of the National Stock Exchange of India Limited in November 1992 as a
tax-paying company unlike other stock exchanges in the country was another significant effort.
With a distinctly different organisational structure, its co-existence with other mutualised
exchanges, was an interesting phase in the capital market history of the country.

Events of conflict of interests and their impact on the market has led to the Union budget for 2002-
03 laying emphasis on demutualisation of stock exchanges. A group set up by the SEBI is expected
to deliberate on this issue, and could be the precursor for sweeping changes in the structure, market
position and management of stock exchanges in the country.

With curbing of market abuse being the prime driver for demutualisation, many of the issues
debated above may sound irrelevant in the Indian context today. But the impacting factors –
technology, competition and institutionalisation and globalisation of the investor – have changed
the Indian capital market. They would continue to do so. This restructuring opportunity may have
to be utilised to assess the competitiveness, efficiency and global aspirations and opportunities of
the Indian market to position it as an important destination in the global financial scene.

Need for Improved Governance

The decision to demutualize is expected to bring a corporation that is more capable to act decisively
and rapidly to changes such as competitive challenges in the business environment. A
demutualized stock exchange facilitates the ownership and trading privileges of the members of
the exchange, thus permits the stock exchange to achieve greater independence. It brings a
management that takes actions that are in the best interests of the stock exchange and ultimately
its shareholders. Therefore, the interests of the owners of the stock exchange will be linked to those
of the stock exchange as both parties will aim at profit maximization. Further, the demutualized

26
Section 25 of Componies Act,2013.
organizational structure will allow for greater transparency because stock exchanges will be
obliged to report to their shareholders not only regarding the bottom-line but also on issues
regarding corporate governance27.

Investor Participation

A demutualized stock exchange is more capable to respond to the needs of its various stakeholders,
including participating organizations, listed companies, and institutional and retail investors. In
order to respond to the emerging competitive pressure, the stock exchanges need to shift power
from one group of stakeholders to another. Separating the stock exchange membership from
ownership, provides a political and legitimate way to effect such shift. For example, contrary to
NSE structure that is mainly composed of broker-dealers as members, a demutualized structure
allows both institutional investors and retail investors to become shareholders. In addition, it can
meet the needs of institutional investors who require greater liquidity to accommodate block.
trading and place more emphasis on negotiating the lowest price

Raising Capital

With the capital raised from IPO private investment and the increased responsibility to
stakeholders, the demutualized structure is more capable to respond to the global competitive
pressures as it allows for the resources and incentives needed for investment in competitive
products and information systems. In order to compete, stock exchanges must have timely, cost-
effective and reliable products and services. One of the clear historical examples that show the
importance of demutualization in raising capital is the replacement of floor trading with screen
trading. Introducing screen trading requires considerable capital investment in the information
system of the exchange. Demutualization was an efficient and rational means of raising additional
capital required to finance such activity. Continued capital investments in technology can also help
to respond to competition from ATS and upstairs trading.

Consolidation

Another factor that has affected the competitive landscape of capital markets and stock exchanges
is the strategic alliances and consolidations. One example is the merger of NASDAQ and the

27
Hughes and Zargar, 2006, p. 10-11.
American Stock Exchange that was completed in November 1998, which created a stock exchange
with a market capitalization of US$1.9 trillion with unique varieties of products. According to
Hughes, major consolidations in the financial stock exchanges industry are expected to take place
in the next 5 to 10 years. These consolidations will include leading derivative and equities
exchanges. In the derivative market, both the Toronto Stock Exchange (TSX) and New York Stock
Exchange (NYSE) have announced plans to expand their capabilities. In equities trading, given
that North America is already dominated by the NYSE and NASDAQ, the most interesting arena
will continue to be Europe where one or two large stock exchanges are likely to emerge. The
demutualization structure with publicly traded shares should greatly facilitate the consolidation
structure. Demutualized exchanges, as shareholders entities are forced to report their performance
and seek revenue and cost-saving mechanisms.
CONCLUSION
The study concludes that demutualization enhances stock market liquidity, in line with Otchere
and Hazarika28. Furthermore, policies that foster economic growth must contribute positively to
stock market liquidity (for example, policies that encourage the participation of pension and life
assurance companies on the stock market). Policy sequencing is an important consideration in
promoting stock market development. While automation is expected to reduce transaction costs
and encourage more foreign participation, this study shows that the effects on liquidity are not
statistically significant if automation is not followed by demutualization. Contrary to studies that
document governance challenges of demutualization, we find convincing statistical evidence to
support the view that demutualization significantly promotes stock market liquidity.

The advantages of demutualized stock exchange are as follows. Firstly, demutualization results in
more flexible governance structure fostering decisive action in response to changes in the business
environment. Secondly, it leads to greater investor participation in the governance of the exchange.
Thirdly, it yields an improved platform in response to potential competitors in the form of
alternative trading systems. Further, demutualization allows greater flexibility and access to global
markets. Fifthly, it also facilitates faster and more complete consolidation of stock exchanges to
enhance available synergies. And finally, it ensures increased access to resources for capital
investment raised by way of equity offerings or private investment.

An exchange regulator faces many challenges in the current environment. The challenges become
particularly acute when an exchange, operating in a competitive marketplace, decides to
restructure its operations as a for-profit entity. The issues discussed above already are being
considered by regulators in a number of jurisdictions. Regulators appear to be responding to these
challenges in different ways. These differences may be a reflection of unique circumstances or
different philosophies. Given the importance of an exchange in the financial and economic system
of a country and the additional complexities posed where an exchange becomes a for profit entity
actively competing for business, these issues will continue to demand regulatory attention.

28
Hazarika S (2005) Governance Change in Stock Exchanges. Working Paper. University of North Carolina Chapel:
Hill. 

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