Demutualization and enforcement incentives at self-regulatory financial exchanges

  • n the last few years, many of the world’s largest financial exchanges have 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 regulations that protect investors from dishonest agents. We examine how the incentives to enforce such regulations change as an exchange converts from mutual to for-profit status. 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.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Author:David Reiffen, Michel Robe
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2008,44
Series (Serial Number):CFS working paper series (2008, 44)
Document Type:Working Paper
Year of Completion:2008
Year of first Publication:2008
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2009/01/29
Tag:Customer Protection Rules; Demutualization; Enforcement Delegation; Ownership Structure; Regulation of Financial Institutions
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht