The Impact of Demutualization


Over the last decade, the securities exchange industry has witnessed a wave of demutualizations shifting ownership in exchanges from members and other insiders to outside investors. The demutualization of a stock exchange is a complex process that gradually takes it from being a mutual society to being a listed company. Over the course of this process fungibility of ownership increases while conflicts of interest among owners diminish (Steil, 2002). This phenomenon has been pioneered in Europe with Stockholmsborsen becoming the first for-profit exchange in 1993 and listing in 1998. Over the past 7 years more than a dozen of the world’s largest exchanges have demutualized and listed their shares publicly. Today, demutualized exchanges control more than 75% of the European market for equity transactions.1


Stock Exchange Secondary Market Random Effect Liquidity Measure Primary Market 


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