📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!
  • google app store apple app store
    • ✖

      Question

      In the evolving landscape of financial markets, the

      structure and governance of stock exchanges have undergone significant changes to improve transparency, efficiency, and accountability. One of the key transformations involves changing the legal structure of stock exchanges to separate ownership and management from the trading rights of their members. This process ensures that the exchange operates as a business corporation, thereby reducing potential conflicts of interest and aligning its operations with global best practices. This structural change was mandated by the government through legislative amendments to enhance the integrity and functioning of stock exchanges. Which of the following refers to the segregation of ownership and management from the trading rights of the members of a stock exchange?
      A Dematerialisation Correct Answer Incorrect Answer
      B Securitization Correct Answer Incorrect Answer
      C Demutualization Correct Answer Incorrect Answer
      D Transformation Correct Answer Incorrect Answer
      E Listing Correct Answer Incorrect Answer

      Solution

      Demutualization is the process of transforming the legal structure of a stock exchange from a mutual organization, where the same entity owns and manages the exchange, to a business corporation. This change segregates the ownership, management, and trading rights at the exchange, thereby ensuring that these roles are independent of one another. This transformation was mandated by the government through an ordinance passed in 2004, which amended the Securities and Contract (Regulations) Act to make the demutualization of stock exchanges compulsory. The objective is to enhance transparency, reduce conflicts of interest, and improve the overall governance of stock exchanges.

      Practice Next
      More General Topics in Finance Questions
      ask-question