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Demutualization and customer protection at self‐regulatory financial exchanges

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  • David Reiffen
  • Michel Robe

Abstract

In the past decade, many of the world's largest financial exchanges have demutualized, i.e., converted from mutual, not‐for‐profit organizations to publicly‐traded, for‐profit firms. In most cases, these exchanges have substantial responsibilities with respect to enforcing various “trade practice” regulations that protect investors from dishonest agents. We examine how the incentives to enforce such rules change as an exchange demutualizes. In contrast to oft‐stated concerns, we find that, in many circumstances, an exchange that maximizes shareholder (rather than member) income has a greater incentive to aggressively enforce these types of regulations. © 2010 Wiley Periodicals, Inc. Jrl Fut Mark 31:126–164, 2011

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  • David Reiffen & Michel Robe, 2011. "Demutualization and customer protection at self‐regulatory financial exchanges," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 31(2), pages 126-164, February.
    • Handle: RePEc:wly:jfutmk:v:31:y:2011:i:2:p:126-164
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    Cited by:

    1. Ben Slimane, Faten & Padilla Angulo, Laura, 2019. "Strategic change and corporate governance: Evidence from the stock exchange industry," Journal of Business Research, Elsevier, vol. 103(C), pages 206-218.
    2. Manuela Geranio, 2016. "Evolution of the Exchange Industry," Springer Books, Springer, number 978-3-319-21027-8, November.
    3. Kobana Abukari & Isaac Otchere, 2020. "Has stock exchange demutualization improved market quality? International evidence," Review of Quantitative Finance and Accounting, Springer, vol. 55(3), pages 901-934, October.

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