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Stock Exchange Mergers in the Aftermath of the Crisis: New Insights

In: Crisis, Risk and Stability in Financial Markets

Author

Listed:
  • Maurizio Polato
  • Josanco Floreani

Abstract

Securities exchanges play an important role in producing liquidity for securities and providing settings for efficient price discovery. Therefore, they fulfil a fundamental function in the flow of funds from savings to investments. Aside from this public function, demutualized exchanges (listed ones in particular) behave as profit-maximizing entities. Exchanges operate in an ever more competitive market in which it has become, particularly in the last 10 years, more difficult to retain the rents stemming from their traditional natural monopoly status. This was the main rationale for exchange demutualization (see, among others, Steil, 2002; Aggarwal, 2002). The incentive problem is also analysed in Serifsoy and Tyrell (2006) where it is shown how a mutual exchange, in the face of competition from a for-profit, outside-owned platform, can survive only by adopting a similar governance structure.

Suggested Citation

  • Maurizio Polato & Josanco Floreani, 2013. "Stock Exchange Mergers in the Aftermath of the Crisis: New Insights," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Juan Fernández Guevara Radoselovics & José Manuel Pastor Monsálvez (ed.), Crisis, Risk and Stability in Financial Markets, chapter 8, pages 183-202, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-1-137-00183-2_9
    DOI: 10.1057/9781137001832_9
    as

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