Demutualization Of Overseas Stock Exchanges And Its Inspirations To China

Stock exchanges worldwide can basically be classified into two types by their organization structures: non-profit member-owned mutual organizations and for-profit shareholder-owned corporations. Due to underdeveloped trading technology and traditional trading method, most stock exchanges were organized mutually before the end of last century. But since 1990s, the revolutionary development of information technology and the rising competition among stock exchanges have changed the market of the industry considerably. Under this background, more and more stock exchanges chose to demutualize toward for-profit corporations in order to improve their operational performance and win larger market share. While demutualization has become a global trend for exchanges, each stock exchange devised different way for its organizational transformation and adopted relevant regime to release potential conflicts among different interest parties. Compared to the major overseas stock exchanges, China's stock exchanges are government dominant, which is harmful to China's capital market in aspects of innovation and financing and calls for an organizational reform.There are four chapters in this dissertation:The first chapter explains why this topic was selected, illustrates the major definitions and research method employed in this paper and summarizes the major literatures on this topic both from overseas and domestic academic circles. Besides, this chapter points out the creation and shortcomings of this dissertation from the author's perspective.The second chapter explains the inevitability of stock exchange demutualization in the background of technology advances and market competition by comparing the characteristics of member-owned and shareholder-owned stock exchanges and then analyzes the forces drive the organizational reform. In addition, this chapter depicts the models and steps of reform through theoretical analysis and case studies and then describes the current status and trend of the demutualization wave of overseas stock exchanges.The third chapter can be divided into two parts. By referring some key financial indexes, the first part illustrates the high operational performance of stock exchanges after demutualization and meanwhile finds the reasons for it. The second part analyzes the two major potential conflicts that may arise after demutualization and briefly introduces the regimes that are commonly adopted in practice to avoid and release the conflicts.The forth and last chapter mainly discuss the organization features of China's stock exchanges. On the basis of analyzing the shortcomings of government dominance that exists in China's stock exchanges, this chapter puts forward that conducting organizational reform that turn stock exchanges from government-controlled institutions to for-profit corporations is the only way to promote the competitiveness of our country's stock exchanges and ensure the healthy development of our capital market. At the end, this paper proposed five principles for the organizational reform of China's stock exchanges.