Demutualization and Corporate Governance of Stock Exchanges

22 Pages Posted: 25 Nov 2002

See all articles by Reena Aggarwal

Reena Aggarwal

Georgetown University - Robert Emmett McDonough School of Business


Securities exchanges all over the world are demutualizing and converting from non-profit mutual organizations to for-profit, investor owned corporations. Several exchanges have become publicly traded companies and are listed on the exchange itself. The dramatic changes in the organizational form of the exchanges reflect major changes in their business environment caused by intense global competition and advances in technology. Some of the traditional sources of revenue, such as listing fees, membership fees, and sale of information services and market data are becoming less important. Transactions fee will continue to be one of the most important sources of revenue and exchanges that can attract liquidity will succeed. Exchanges are adding new products and services to expand their revenue base. Typically, exchanges have operated as self-regulatory organizations and the new organizational structure has raised a number of regulatory issues. There are concerns about the inherent conflict of interest between the business operations and the regulatory obligations. However, demutualized exchanges argue that enforcing a good regulatory framework is critical to an exchange's commercial success.

Keywords: Demutualization, Stock Exchanges, For-profit, Corporate Governance

Suggested Citation

Aggarwal, Reena, Demutualization and Corporate Governance of Stock Exchanges. Journal of Applied Corporate Finance, Vol. 15, Spring 2002. Available at SSRN: or

Reena Aggarwal (Contact Author)

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-3784 (Phone)
202-687-0798 (Fax)


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