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Part IV Market Institutions And International Capital Markets, 11 Stock Exchanges—An Endangered Species

Edited By: Jeffrey Golden

From: International Capital Markets: Law and Institutions (2nd Edition)

Cally Jordan
Edited By: Jeffrey Golden (Consultant Editor)

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 27 February 2024

Stock market and exchanges — Financial regulation — Financial stability

This chapter explores stock exchanges, which are the most visible and vocal among capital market institutions. Despite the waves of demutualization and consolidation, exchanges remain idiosyncratic institutions. Even where similar structural reorganizations have occurred, the underlying factors prompting such moves, and potentially the on-going operations of the exchanges, are often quite different. As capital markets grew in importance, the role of exchanges extended beyond that of a trading venue. The modern exchange also serves political masters, acting as a national symbol in some cases, and thus eliciting regulatory responses not based on market considerations alone. More importantly, exchanges are imbued, implicitly or explicitly, with a ‘public interest’ due to their impact on the related issues of economic growth, systemic financial stability, and investor protection. The chapter then considers high frequency trading, which drove institutional investors off the exchanges and into the ‘dark pools’, creating concerns over exchange liquidity, transparency, and price-discovery.

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