Transcript Markets for Sale: Causes and Consequences of Stock Exchange Demutualization Helen Callaghan, (MPIfG) Paul Lagneau-Ymonet, (Paris-Dauphine) Angelo Riva (EBS-Paris & IDHE Paris-Ouest-LaDefense)

Markets for Sale:
Causes and Consequences of Stock
Exchange Demutualization
Helen Callaghan, (MPIfG)
Paul Lagneau-Ymonet, (Paris-Dauphine)
Angelo Riva (EBS-Paris & IDHE Paris-Ouest-LaDefense)
Research Agenda: What drives change in capitalist social systems?
=> Streeck 2009:
•move beyond abstract labels to identify mechanisms of change in
specific historical contexts.
•Focus on competition and innovation
Our case study: Stock market demutualization in France and
Germany, 1980-2010
Findings:
-Innovation as one resource among others
-Competition as “rule of the game”
-Political agency as the crucial initiator
Background (2): What is demutualization, and why does it
matter?
Traditional governance structure
New governance structure
“Durkheimian”:
• Ownership by users (mainly
financial intermediaries)
• Self-governance and selfregulation by user-owners
“Williamsonian”:
• Separation of ownership rights
from membership rights
• conversion of membership rights
into common stock holdings
Demutualization as a three-step process
• The incorporation;
• The IPO;
• The sell of their shares by the
former owners-users.
Illustration: Demutualization in Germany
Significance of strategic investors in the ownership structure of Deutsche Börse Group
Significance of Anglo-American Investors in the Ownership Structure of Deutsche Börse Group
Illustration: Demutualization in France
Mainstream explanations and their limits
Standard three-level rationale:
• normative optimality of market coordination (Ansidei 2001; Ramos 2003)
• IT-revolution (Schwartz et alii 2009)
Predicted outcome of demutualisation
Actual outcome of demutualization
-lower trading fees
-supremacy of the bigger intermediaries
-increased liquidity
-Fragmentation, opacity & privatisation of
liquidity among exchanges and alternative
trading venues
-lower capital costs for issuers
-growing conflicts between users
(intermediaries and issuers) &
shareholders (funds of all kind)
Case study: the political economic constitution of markets for
markets in France and Germany
France
Germany
The (national)
In the 1980s, the
In the 1990s, the
political impetus
struggle against
containment of
inflation through the inflation caused by
reform of the
reunification.
financial system.
•The capture of intermediation profits
The business drive
by banks, against local intermediaries;
•Stock exchanges ceased to be
perceived by banks as strategic holdings.
The EU political drive Since the dawn of the millennium, the
contested disembedding of stock exchanges
from their historical financial centres
Conclusion: Lessons from the case study
•At the policy-making level: A “sorcerer’s apprentice” sequence
•At the industry level: The failure of “efficiency through competition”
•At the organizational level: The end of exchanges?
About the drivers of change in capitalist systems:
Political agency shaped the competitive arena in which technological
innovation was one resource among others