Demutualization Of Securities Exchanges:Overseas Trend And Chinese Choice

Securities market acts as prime important role in economy and sovereignty of country or region and securities exchanges are the core institutes of the markets, so there are major theoretical and applicable significance in study on demutualization of them.First, after the review of the securities market formation in early west Europe and northren America we argue that the feudal guild institution and behindhand corporation ideas led to the mutual system of primary exchanges and the traditional exchanges were suitable to their separated and stable market by artificial transaction in decentralized physical hall.Second, traditional exchanges showed intrinsic limitation of unjust control by members’benefits and intrest conflict between member brokers and outer investers facing to the market evolvememt of transaction technology, market competition and participaters. Then the trend of demutualization of overseas exchanges is introduced and in other words all main overseas exchanges have been reformed as morden corperation, agitation of aquistion and merger is now transferring to Asia and Pacific area from Europe and northren America. Further analysis found that decision efficiency and innovation ability were improved by clear guidance from demutualization, dumutualization (especially self-listing) would lead to intrest conflicts from the difference between commercial and public benefits and systematic supervision structure should be established to deal with the conflicts to ensure priority of public benefits and display the public welfare of securities transaction and service.Third, conclusions were drawn from analysis of mathematical model including index of social efficiency that demutualized exchanges are relatively inefficient because of crowding-out effect and mutual exchanges are relatively inefficient because of crowding-in effect. Two samples are composed of exchanges of developed countries and some south-east Asia emerging economies and systematic analysis of the samples with multiple-index after model improved by the substitution of GDP to time indicates that exchanges’performance have been enfluenced significantly and positively in main developed countries and emerging economies exchanges’ performance didn’t change much on the whole.There were both effects of transverse sample points and longitudinal time. Robust examination gave affirmative answer to the normal model. In the following, the development of securities market and exchanges in new China is divided into three stages and exchanges’contribution is definite in cooperating state-owned enterprise reformation, financing them, solving banks’ problems and improving investing system in early times. In the mean time, there were still problems to Chinese exchanges such as fuzziness of owner’s status and excessive administratve intervene which brought about their market performance of lacking of core ability of resource allocation and decline of basic ability of fund raise. Chinese exchange should be got to demutualized quickly to fitting for Chinese economy growing at high speed and capital market openning after China joined WTO.At last, it can be enlightened by overseas succeful practice argued that it was imperative and of far-reaching significance to get Chinese exchange demutualized after theoretical demonsreation and market analysis. The feasible countermeasure is referencing the practice of state-owner enterprice especially bank reformation to establish sound share-holders structure, make inner governance including self-supervision perfect and improving outer regulation mode to balance increasing market efficiency and resolving benefit conmflict. Relying on flexible decision mechanism and positive developing strategy the demutualized exchange will actually be oriented to clients’interest through production and market innovation to set up fair, just and transparent effective domestic market and occupy deserved position in international finance system.