Exchanges, Listless?: The Disintermediation of the Listing Function

Abstract

This contribution to the Wake Forest Law Review’s Symposium on the Future of Disintermediation explores the continuing relevance of exchange listing. As the traditional intermediary for secondary market trading, securities and derivatives exchanges have historically exercised self-regulatory authority in three interrelated spheres: regulation of trading practices, regulation of the business conduct of their broker-dealer members, and regulation of listed companies. Within the past decade, competition among demutualized, for-profit exchanges and other trading venues has triggered a series of regulatory reforms that has eroded this self-regulatory authority in the first two spheres. Exchanges, however, have managed to retain their formal authority over admission to listing under both U.S. and EU capital markets legislation, even as such legislation increasingly uses listing as a factor in calibrating the costs and benefits of public company regulation and in assuring the integrity of benchmark derivatives. This contribution seeks both to describe the regulatory and commercial pressures to disintermediate listing and to speculate as to the future of the listing function.

Keywords: exchange, stock exchange, listing, disintermediation