Demutualization

From MarketsWiki
Jump to navigation Jump to search



Demutualization refers to the process of changing the ownership structure of a member-owned (or mutually-owned) financial institution into a shareholder-owned corporation. High-profile demutualizations amongst securities-trading exchanges such as the NYSE and the CME are best known but demutualization has also become common among life insurers and building societies.

That's money[edit]

Financial institutions that demutualize receive large influxes of capital from their new owners plus easier access to future capital through the financial markets and so is common amongst mutually-owned instututions that need to invest in growth to compete.[1] Life insurers were amongst the earliest pioneers of demutualization but the 1980s and 1990s saw a wave first among building societies and then producer co-operatives and trading exchanges.[2]

Listed Exchange Operators[3]
Listing date Listed exchange/ exchange operator Market value (US$m. equivalent 31.12.05)
Mar. 1987 OMX Group 1,645
Oct. 1998 ASX 2,407
June 2000 HKEx 4,407
Nov. 2000 Singapore Exchange 1,803
Feb. 2001 Deutsche Boerse 11,028
July 2001 Euronext NV 5,879
July 2001 London Stock Exchange 2,710
April 2002 Sydney Futures Exchange 1,315
Nov. 2002 TSX Group 2,745
Dec. 2002 Chicago Mercantile Exchange 12,651
April 2004 Osaka Securities Exchange 560
Feb. 2005 The Nasdaq Stock Market, Inc. 2,834
Mar. 2005 International Securities Exchange 1,030
Mar. 2005 Bursa Malaysia 497
Oct. 2005 CBOT Holdings Inc. 4,951
Nov. 2005 InterContinental Exchange 2,015
Mar. 2006 NYSE Group
July 2006 Bolsas y Mercados Españoles

Latest news[edit]

The 20-year push for demutalization by member-held public trading co-operatives is now being felt in some of the investing world's frontier markets. The latest global exchange to put demutualization on its agenda is Kenya's Nairobi Stock Exchange (NSE), the fifth-largest in Africa. New NSE chief executive Peter Mwangi said on taking office in November 2008 that demutualization of the exchange ranked "very, very highly" on his to-do list.[4]

References[edit]