The Institutional Transformation of China’s Stock Exchanges: A Comparative Perspective

A stock exchange is a place to list and trade stocks. Many Anglo-American exchanges have seen a dramatic transformation from mutual membership organizations to for-profit and even self-listed corporations. In contrast, China’s exchanges still maintain the “strange” characteristic – they are a hybrid body of membership and bureaucracy. Their distinctions can be explained through the market-induced approach and authority-imposed approach. The advent of Anglo-American exchanges is mainly induced by market players, while their compelling transformations are jointly driven by market players and pro-competition authorities. However, the creation, formulation and evolution of China’s exchanges are imposed firstly by local authorities for institutional control and then by central authorities for institutional control. Although the growing market factors have been to some extent considered by Chinese authorities over the last few years, there is little possibility that market forces will fundamentally change the structure of China’s exchanges. The exchanges will be continuously dominated and controlled by authorities, so the same institutional transformations as Anglo-American exchanges will not occur in China in the foreseeable future.