Historical differences in equity securities, Financial Management

Public Bourses

The origin of this type of bourses can be found in the legislative work of Napoleon. These type of bourses are regulated by the government, brokers are appointed by the government and they command a complete monopoly over all the settlements. Brokerage firms are private and new brokers are proposed to the state for nomination by the brokers' association. Earlier stock exchanges in Belgium, France, Spain, Italy, Greece and some Latin American countries were run by their respective governments. Before deregulation, the Paris bourses were also of this type. Commissions and other relevant matters were decided by the government. The main beneficiaries of this system are brokers because they command complete monopoly as their number is fixed. Even for a private deal arranged by two banks, the transactions had to legally go through the brokers. Deregulation affects this kind of bourses, because brokers tend to lose their monopoly.

Private Bourses

Private Stock Exchanges are originally founded by the independent members for the purpose of stock trading. Several private stock exchanges can exist and operate within a country; for example, functioning of several stock exchanges in the US, Japan and Canada. However, in some countries like the UK, one prominent stock exchange dominates the other small stock exchanges. Although these bourses are private, they are not free of government regulation. A mix of self-regulation and government supervision is required to make all these exchanges Self-Regulatory Organizations (SROs). In private exchanges, members are supposed to perform all the work on the floor of the exchange and commissions are usually fixed in accordance with the agreement between stock exchanges and the public authority. Private bourses are active in Canada, Australia, South Africa and Japan.

Bankers' Bourses

In some countries, only banks are permitted to trade in stocks. For example, in Germany, the Banking Act allows only banks to function as brokerage firms and so they enjoy a complete monopoly. Bankers' bourses are found in some other countries like Austria, Switzerland and the Netherlands. These type of bourses can be private or semi-public entities. Their main function is to provide a convenient place for banks to interact. Many regional bankers' bourses are directly linked to the local Chambers of Commerce. Bankers can trade directly without any involvement of official bourses but regulation is applied to both - the bourses and the attached bank.

 

Posted Date: 9/10/2012 5:26:00 AM | Location : United States







Related Discussions:- Historical differences in equity securities, Assignment Help, Ask Question on Historical differences in equity securities, Get Answer, Expert's Help, Historical differences in equity securities Discussions

Write discussion on Historical differences in equity securities
Your posts are moderated
Related Questions
Issuing Procedure Treasury bills are sold using the auction procedure. The Treasury entertains both competitive and non-competitive tenders for T-Bills. Government securities f

Event-Driven Strategies : These strategies are solely focus on events of corporate life cycle for investing. They involve significant opportunities created by corporate events such

Tokyo Stock Exchange In the 1870s, a securities system was introduced in Japan and public bond negotiations began. This resulted in a demand for public trading institution, whi

Q. What do you mean by Collateralized Mortgage Obligation? Collateralized Mortgage Obligation (CMO) - SECURITY whose cash flows equal the difference between cash flows of colla

limitations of using a periodic inventory system

Pension Reforms On January 1, 2004, Pension Funds have come into force in India. Government servants will have to subscribe to them. The new pension fund system is primarily dr

Convertible bonds can be classified into different types such as callable bonds and puttable bonds. These bonds are discussed as follows: Basics of Callable Bonds A callabl

A friend is looking for advice on one of his investments, KER. KER manufactures stationery supplies, the entity appointed a new Chairman in 2008 and since then has been executed an

Role of Custodians The Securities and Exchange Board of India on 5th May, 1996, through its notification No.S.O.344 (E) has issued the SEBI (Custodian of Securities) Regulation

OTCEI-COMPOSITE INDEX The OTCEI index is a pure price index. The sum of the prices of all shares as of June, 1993 is in the denominator. The current prices are in the numerator