| Since the establishment of Amsterdam Exchange in 1611, the stock exchange has always been the center of the stock market. It provides a place for the investors to concentrate and compete prices to buy and sell stocks and it also has the functions to create continuous market, to form a fair price and to protect the market order. Historically, most exchanges are not-for-profit organizations mutually owned by their members, who are not only the decision-makers but also the direct users of their trading services and take decisions on a one-member, one-vote basis. As the development of the technology and the aggravation of the competition, great changes have taken place in stock exchanges: the electronized and the networked stock exchanges has changed the traditional methods of trading, which make the exchange be independent from the hall and the brokers are losing their information advantage; the liberalization of the stock market has wavered the monopoly position of the stock exchanges; the globalization of the stock market has increased the integration between the stock exchanges; the development of the ATSs (Alternative Trading Systems) have the heavy impact on the traditional exchanges. In order to reply to the trends and competitive challenges, the exchanges over the world have taken lots of measures to strengthen their competitive power, which caused the trend of demutualization of the stock exchanges.This thesis is composed of four chapters. Chapter One introduces the reason for topic chosen, theoretical and practical meaning, research purpose, basic train of thoughts, research approaches, basic concepts and briefly introduces current research situation in developed countries. In this chapter, the author explained the concept of 'demutualization', then analyze the problems the traditional exchanges are facing and the tendency of the reform under the trend of demutualization. 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. It is to adapt the environment of monopoly and non-automatic trading. But as the rapid development of the technology and the competition, the traditional stock exchanges won't meet the needs of the changing stock market. 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 exchanges. The dramatic changes in the organization form of the exchanges reflect major changes in their business environment caused by intense global competition and advances in technology. In Chapter Two, the author argued the shortcomings of the traditional exchanges governance structure, analyzed the problems exist in the Chinese exchanges from the legislative and practical point of view, and suggests that the governance structure of Chinese stock exchanges should transit to the corporate governance structure. Generally speaking, the traditional exchanges are mutual, inside which there are lots of shortcomings: Decisions are usually made on a one-member, one-vote basis and often are made by committees of representatives of member firms; Ownership rights may not be freely tradeable and terminate with cessation of membership; Mutuals seldom are able to raise capital from anyone other than members, all of which block the development of the traditional exchange under the background of Globalization, Electronication, and Internet. That caused the stock exchanges all over the world to demutualize and convert from non-profit mutual organizations to for-profit, investor owned corporations. The advantages of the demutualized exchanges are as follows: the ownership and the trading right is separated, the number of members won't be limited any more, which is better for the e... |
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