Corporate Governance

The Role of Stock Exchanges in Corporate Governance: The Dominant Players (Part 2)

By J. Robert Brown

We are discussing The Role of Stock Exchanges in Corporate Governance, a report issued by the OECD.  The study examined ten exchanges (some of which were, in turn, clusters of exchanges, such as Euronext), ranging from NYSE/Nasdaq, to Warsaw to Tokyo.  All of the exchanges had demutualized except for Warsaw which remained state owned.  The Six Swiss Exchanges and Tokyo had demutualised but were not listed.  All of the others were listed companies.

In terms of size, the data on equity market capitalization of the exchanges (from June 2008, so before the big dive arising out of the financial crisis) showed the dominance of the United States.  The NYSE (shorn of Euronext) came in at $14.4 trillion, and Nasdaq (shorn of OMX) at $3.6 trillion.  The Tokyo exchange had a market capitalization of $4 trillion and Euronext at $3.5 trillion, not exactly competition for the NYSE (particularly since it owns Euronext). 

As for the LSE, it was a more meager $3.3 trillion.  In short, the NYSE and Nasdaq are the dominant players, at least by size, collectively exceeding the other exchanges examined.  As we shall see, the US stock exchanges are unique in more than just their dominant size.  They are likewise unique in their regulatory role, as we shall discuss in the next post.

Full post as published by The Race to the Bottom on September 14, 2009 (boomark / email).