What Ive Learned

On July 21, I went to a family barbeque in Rochester, NY. After leaving the barbeque, I was on my way to meet my brothers John and Nick at the local bar to talk and have fun. After we saw our oldest brother John off, Nick and I decided to race down the main street in town. I learned on this day to never race a vehicle around a dangerous curve. While my brother and I exited the parking lot of the bar, he went around me to lead. I followed him until we reached the main street, Peach St.As we approached the street, Nick lined up on the right side of my vehicle and within three seconds we stepped on the gas pedal. While speeding down Peach St. around 80-90mph, I noticed that after we passed the community center. Also, I was now in the lead. Since I had the lead, I attempted to apply my brakes but because I was going too fast they wouldn’t work. Noticing that my brakes weren’t working, I thought about what was going to stop my car in this residential area. At this point, all I could do was keep my foot on the brakes and scream.As I began to scream, I watched as my car went through someone’s living room window and my body hit the steering wheel. After the car went through the living room window, I then got out making sure everyone was alright. Now that everyone was fine, I called the police, and my family. While standing outside my car, I look around and all I see is my car on the porch of the house with glass all over it and the front wheel turned the opposite way. From my speeding, I totaled my car and destroyed someone’s house.Realizing what just happened, I now felt like I was hit back to back by three tractor trailers. This was one of the worst feelings to experience. Because of my dumb decision to speed, I ended up with no car; the family who was enjoying their night was out of a house for a few nights. I was now stuck dealing with a new type of depression. At the end of the day I honestly promised my daughter and myself as well as m y family that I was done with racing unless it was on a real track.

Demutualization of Stock Exchanges

DEMUTUALIZATION OF STOCK EXCHANGES PROBLEMS, SOLUTIONS AND CASE STUDIES Edited by SHAMSHAD AKHTAR Director, Governance, Finance and Trade Division, East and Central Asia Department, Asian Development Bank  © Asian Development Bank 2002 All rights reserved. The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank, or its Board of Governors or the governments they represent. The Asian Development Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequences for their use.Use of the term â€Å"country† does not imply any judgment by the authors or the Asian Development Bank as to the legal or other status of any territorial entity. ISBN 971-561-475-2 Publication Stock No. 100602 Published and printed by the Asian Development Bank P Box 789, 0980 Manila, Philippines . O. CONTENTS Foreword Principal Authors Abbreviations xiii xv x xi PART I : ISSUES INVOLVED IN STOCK EXCHANGE DEMUTUALIZATION 1 Demutualization of Asian Stock Exchanges— Critical Issues and Challenges by Shamshad Akhtar 1. 1 1. 2 1. 3 1. 4 1. 5 1. 6 1. 7 1. Introduction Demutualization: Its Definition, Size and Significance Motivation and Driving Factors for Demutualization From Mutuality to Demutualization of Exchange Benefits of Demutualization of Exchanges Regulatory Oversight: Challenges and Responses for Demutualized Exchange Financial Viability of Demutualized Exchange Conclusion 3 3 4 5 8 12 19 25 29 2 2. 1 2. 2 2. 3 2. 4 2. 5 2. 6 Background Information on Demutualization by Pamela S. Hughes Introduction What Demutualization Means The Reasons to Demutualize The Models An Update Since Demutualization Conclusion 33 33 33 36 40 43 47Demutualization of Stock Exchanges—Problems, Solutions and Case Studies APPENDIX 1 : The Models 48 3 Motivations, Mechanics and Models for Exchange Demutualizations in the United States by Roberta S. Karmel 3. 1 3. 2 3. 3 3. 4 Overview Reasons for Demutualization How Demutualization is Accomplished Post-Demutualization Models 59 59 61 65 70 4 The Structure of a Demutualized Exchange— The Critical Issues by David Holthouse 4. 1 4. 2 4. 3 4. 4 4. 5 4. 6 4. 7 Introduction Ownership Corporate Governance Access Rights Risk Management Financial Management Conclusion 73 73 73 77 80 81 82 83 Demutualization of Exchanges— The Conflicts of Interest (Hong Kong) by William Pearson 5. 1 5. 2 5. 3 5. 4 5. 5 5. 6 5. 7 Structure of Exchanges Regulatory Role and Self-Regulation Public Policy Objectives of Stock Market Regulation Why Should Demutualization Require a Reassessment of SRO Functions? What Responses are Being Developed to Deal with These Problems? Conclusion Hong Kong’s Framework: Listing of HKEx and the Framework for Dealing with Conflicts of Interest 85 85 88 91 92 95 99 100 iv Contents APPENDIX : Hong Kong Exchanges and Clearing Limited: Reinforcing Hong Kon g’s Position as a Global Financial Centre—A Policy Paper 2 : Memorandum of Understanding for the Listing of HKEx on SEHK 3 : Section 13 of the Exchanges and Clearing Houses (Merger) Ordinance 4 : Chapter 38 of the Rules Governing the Listing of Securities on the Stock Exchanges of Hong Kong Limited 5 : Procedures to Deal with Conflicts of Interest 105 114 131 APPENDIX APPENDIX APPENDIX 133 138 APPENDIX 6 Demutualization of Exchanges—The Conflicts of Interest (An Australian Perspective) by David Holthouse 6. 6. 2 6. 3 6. 4 6. 5 6. 6 6. 7 6. 8 6. 9 Introduction Background to Conflicts An Exchange’s Listing Regulation of Other Listings Supervision of Intermediaries Profit Motive versus Supervisory Function Public Interest versus the Exchange’s Commercial Interest New Business Lines Conclusion 145 145 146 148 149 149 150 152 153 154 7 Demutualization of Exchanges—The Conflicts of Interest (The Australian Regulator’s Experience) by Claire Grose 7. 1 7. 2 7. 3 Introduction Self-Listing Other Conflicts 157 157 157 160 vDemutualization of Stock Exchanges—Problems, Solutions and Case Studies 8 8. 1 8. 2 8. 3 Regulation of a Demutualized Exchange (Canada) by Pamela S. Hughes Introduction Role of an Exchange Self-Regulation and Government Oversight SRO Conflicts of Interest Supervision of Listings Self-Listing Managing Conflicts of Interest Prudential Regulation Shareholders Directors and Officers Memoranda of Understanding Conclusion 163 163 165 165 169 171 171 172 172 173 175 175 176 8. 4. 8. 5 8. 6 8. 7 8. 8 8. 9 8. 10 8. 11 8. 12 9 9. 1 9. 2 9. 3 9. 4Regulation of a Demutualized Exchange (Singapore) by Lee Boon Ngiap Background Regulatory Issues Arising from Demutualization The Regulatory Relationship between the Monetary Authority of Singapore and Stock Exchange of Singapore Conclusion 177 177 178 179 183 10 Regulation of a Demutualized Derivatives Exchange (United States) by Natalie A. Markman 185 185 186 190 192 195 Introduction A New Framework Exchange Oversight Regulatory Issues Raised by Demutualization Conclusion 10. 1 10. 2 10. 3 10. 4 10. 5 vi Contents APPENDIX APPENDIX APPENDIX : Designated Contract Markets for Regulated US Derivatives Exchanges 2 : Registered Derivatives Transaction Execution Facilities 3 : The CFTC Market Surveillance Program 196 202 205 11 Regulation of Demutualized Exchanges (Australia) by Claire Grose 213 213 214 214 215 215 217 Legislative Framework Australian Securities and Investment Commission’s (ASIC) Powers Supervision by Market Operators Memoranda of Understanding (MOUs) Changes Due to Demutualization New Legislation 11. 1 11. 2 11. 3 11. 4 11. 5 11. 6 PART II: DEMUTUALIZATION CASE STUDIES 2 Australian Stock Exchange—The Conversion to a Demutualized Exchange: ASX’s Experience by David Holthouse 12. 1 12. 2 12. 3 12. 4 12. 5 12. 6 12. 7 12. 8 12. 9 Introduction Background to Australian Stock Exchange’s Demutualization Obtain ing Member Approval Mechanism Used for Conversion Changes to the Corporations Law The Demutualization Process Memorandum of Understanding (MOU) with ASIC Demutualization and Listing Outcomes Subsequent Supervisory Development: ASX Supervisory Review Pty Limited 221 221 222 223 224 225 226 228 229 230 ii Demutualization of Stock Exchanges—Problems, Solutions and Case Studies 12. 10 Changes in ASX’s Focus and Activities 12. 11 Conclusion 231 233 13 Hong Kong Exchanges and Clearing Limited— Demutualization, Merger and Listing: The Hong Kong Exchanges’ Experience by Lawrence Fok 235 235 236 238 239 242 246 Introduction Pre-Merger Period: Two Exchanges and Three Clearing Houses Merger and Proposal Reasons For the Merger Market Reform Conclusion 13. 1 13. 2 13. 3 13. 4 13. 5 13. 6 14Hong Kong Securities and Futures Commission— The Conversion to a Demutualized Exchange: The Hong Kong Regulator’s Experience by William Pearson 247 247 250 255 258 258 The Need for Reform The Reform Process Rationalized Market Regulation Implementing Legislation: Exchanges and Clearing Houses (Merger) Ordinance Key Issues Arising from Hong Kong’s Experience with Demutualization 1 : Summary of the Exchanges and Clearing Houses (Merger) Ordinance 14. 1 14. 2 14. 3 14. 4 14. 5 APPENDIX 261 15Singapore Stock Exchange—Demutualization and Listing of the Singapore Exchange Limited by Alan Shaw 265 265 Introduction 15. 1 viii Contents 15. 2 15. 3 15. 4 15. 5 15. 6 15. 7 15. 8 15. 9 Drivers for Change: The Rationale for Demutualization and Merger Impact of Demutualization The Merger Act The Process of Demutualization The Singapore Exchange’s Initial Public Offer The Structure of Singapore Exchange The Governance of Singapore Exchange Listing and Conflict of Interest 265 267 269 270 271 272 274 276 279 281 5. 10 Conclusion APPENDIX 1: Procedures to Deal with Conflicts of Interest 16 Toronto Stock Exchange—From Toronto Stock Exch ange to TSE Inc. : Toronto’s Experience with Demutualization by Timothy Baikie 283 283 283 286 291 292 296 298 298 Introduction An Overview of the Toronto Stock Exchange (TSE) The Development of Mutual Exchanges Consolidation, Globalization and New Competition The Demutualization Decision Market Regulation by a Demutualized Exchange Next Steps Conclusion 16. 1 16. 2 16. 16. 4 16. 5 16. 6 16. 7 16. 8 17 Demutualization of the Philippine Stock Exchange by Maria Larrie Alinsunurin 299 299 300 300 301 304 307 Introduction Ownership Structure of the Stock Exchange Upon Demutualization Trading Rights Corporate Governance Business of the Exchange Statutory Regulatory Role 17. 1 17. 2 17. 3 17. 4 17. 5 17. 6 ix Demutualization of Stock Exchanges—Problems, Solutions and Case Studies PART III: STRUCTURE OF MUTUAL EXCHANGES 18 The Colombo Stock Exchange (Sri Lanka) y Rajeeva Bandaranaike 18. 1 18. 2 18. 3 18. 4 18. 5 18. 6 18. 7 18. 8 18. 9 Ownership Structure Listing Data Corpor ate Governance Business of the Exchange The Vision, Mission and Corporate Strategy Trading Rights Regulatory Framework Self-Regulation Statutory Regulatory Role 313 313 314 314 315 316 317 317 317 319 320 321 321 18. 10 Investor Protection 18. 11 Funding of the Colombo Stock Exchange 18. 12 Stock Exchange Seeks to Demutualize 19 The Kuala Lumpur Stock Exchange (Malaysia) y Securities Commission (Malaysia) 323 323 323 324 324 325 326 327 329 329 Introduction Ownership Structure of the KLSE Listing Data Corporate Governance Business of the Exchange Trading Rights Risk Management and Supervisory Issues Statutory Regulatory Role Stock Exchange Seeking to Demutualize 19. 1 19. 2 19. 3 19. 4 19. 5 19. 6 19. 7 19. 8 19. 9 x Contents 20 The Shanghai and Shenzen Exchanges: Business Operation, Governance Structure, and Regulatory Function (People’s Republic of China) by Feng Wei 331 331 332 333 335 337 Overview Business Operation Governance Structure Regulatory Function Outlook on Demu tualization 0. 1 20. 2 20. 3 20. 4 20. 5 21 The Taiwan Stock Exchange (Taipei,China) by Wanpo (Mina) Wang 341 341 342 342 343 344 344 347 347 Ownership Structure of Taiwan Stock Exchange Corporation Listing Data Corporate Governance Business of the Exchange Trading Rights Risk Management Statutory Regulatory Role Stock Exchange Seeking to Demutualize 21. 1 21. 2 21. 3 21. 4 21. 5 21. 6 21. 7 21. 8 22 Current Organizational and Regulatory Structure of The Stock Exchange (Thailand) by Klao Sanasen 349 349 352 Thai Capital Market Structure The Stock Exchange of Thailand 2. 1 22. 2 xi Contents FOREWORD Demutualization of a stock exchange is entire process by which a non-profit member-owned mutual organization is transformed into a forprofit shareholder corporation. Exchanges around the world have been demutualizing because of international competition and technological challenges to traditional modes of trading securities. The change of a stock exchange from a member-owned organization to a for-profit shareholder corporation triggers a number of questions about regulatory oversight.When a demutualized exchange is listed on its own board, some regulatory oversight needs to be transferred to a government regulator. In many countries, demutualization of the major national stock exchange has been accompanied by general securities regulatory reform. This book grew out of a conference on Demutualization of Stock Exchanges held in Manila on 13-14 August 2001 organized under the APEC Financial Regulators Training Initiative sponsored by the Asian Development Bank.The conference focused on developing greater understanding of demutualization by discussing the general problems it engenders and how these might be solved, developing common themes and lessons from case studies and also seeing how different countries have evolved different approaches to demutualization. This book is divided into three parts. Part I, consisting of Chapters 1-11, discuss various dimensions and iss ues involved in the process of stock exchange demutualization.Chapters 1-3 give a broad overview of the reasons for demutualization, the critical issues and challenges, the decision-making process relating to demutualization and the possible models stock exchanges may choose, including that of a privately owned for-profit corporation and that of a publicly held company listed on the exchange’s own board. Chapter 4 sets forth the critical issues an exchange and its regulator must confront in connection with the demutualization process from the vantage point of a particular jurisdiction—Australia.Chapters 5-7 discuss the conflicts of interest raised by an exchange’s demutualization and then Chapters 8-11 set forth how regulators in Canada, Singapore, the United States and Australia attempted to deal with some of these conflicts through regulation. Part II of this book is a series of case studies. Chapters 12-17 discuss the demutualization experience in Australia, Hong Kong, Singapore, xiii Demutualization of Stock Exchanges—Problems, Solutions and Case Studies Toronto and the Philippines.Part III of this book provides information about jurisdictions that have not demutualized their exchanges. Chapters 18-22 discuss the Colombo, Kuala Lumpur, Shanghai and Shenzen, Taiwan and Thailand exchanges. Chapters 1-16 were submitted as papers by professionals who presented papers at the conference. Chapters 17-22 were submitted by participants in the conference who were not presenters. This conference was coordinated by the Finance and Industry Division (East) of ADB under the overall guidance and supervision of Ms.Shamshad Akhtar, Director, Governance, Finance and Trade, East and Central Asia Department. Special thanks are due to the various contributors as well as the organizers. The book has been edited by Ms. Akhtar. Ms. Roberta Karmel, Professor of Law at Brooklyn Law School, was engaged to integrate the conference materials and provide edi torial advice. R. Jane Lee, a student at Brooklyn Law School supported the compilation of this book. Mr. Lyle Raquipiso coordinated the publication of this book and Ms. Nancy Bustamante provided administrative support. Geert H.P van der Linden . B. Director General East and Central Asia Department Asian Development Bank xiv Contents PRINCIPAL AUTHORS SHAMSHAD AKHTAR is Director, Governance, Finance and Trade Division of the Asian Development Bank’s (ADB’s) East and Central Asia Department. She oversees ADB’s financial market operations in the People’s Republic of China, Mongolia and the Central Asian Republics, including SME, microfinance and other rural market financial intermediation; governance and private sector assessment work; and trade liberalization and facilitation.Concurrent to holding other portfolio from 1998-2001, she was head of ADB Secretariat for Asia Pacific Economic Cooperation, leading the policy dialogue and preparation of all papers/ documents for this forum, involving interactions with Finance Ministers and Central Bank Governors and their Deputies. Before joining ADB in 1990, she worked as Economist in the World Bank in the 1980’s, and prior to that, in Pakistan’s Planning Agency. She obtained a B. A. in Economics and M. Sc. in Economics from Islamabad, an M. A. n Development Economics from University of Sussex in the United Kingdom (UK), and a Ph. D. in Economics also from UK. She had her post-doctoral fellowship as a Fulbright scholar and was visiting fellow at the Department of Economics, Harvard University in 1987. Ms. Akhtar has presented numerous papers on economics and finance in international conferences. TIMOTHY BAIKIE is Director, Global Market Initiatives at the Toronto Stock Exchange and is responsible for analyzing market structure issues from a broad, strategic standpoint, including the market model for the Global Equity Market (GEM).Previously, he was Special Counsel, Market Regula tion and Director of the Regulatory and Market Policy Division of the Exchange, which is responsible for policy and rule development for the equities and derivatives market. He has spoken at numerous conferences on market regulation, market structure and corporate governance issues and was a member of the Advisory Board for the 1999 Canadian Corporate/Securities Law Moot Court Competition. He received a B. A. from York University (Glendon College), an LL. B. and a B. C. L. from McGill University and an LL. M. rom the University of Illinois at Urbana-Champaign. He was called to the Ontario Bar in 1987. LAWRENCE FOK is the Deputy Chief Operating Officer of Hong Kong Exchanges and Clearing Limited and the Chief Executive of the Stock Exchange. Mr. Fok joined the Stock Exchange in February 1992 and was xv Demutualization of Stock Exchanges—Problems, Solutions and Case Studies appointed Executive Director of the Listing Division in February 1997 and Senior Executive Director of it s Regulatory Affairs Group in November 1998. Mr. Fok has over 19 years of experience in financial services and securities regulatory work.Before joining the Stock Exchange he worked for the Securities and Futures Commission, the Office of the Commissioner for Securities and Commodities Trading of the Hong Kong Government and other private organisations in areas of corporate finance advisory work, securities dealing, venture capital investment, mainland China trade and investment management. CLAIRE GROSE is Special Counsel, Regulatory Policy Branch at the Australian Securities and Investments Commission (ASIC). For two years prior to July 2001, she held the position of ASIC’s Director, National Markets Unit.Before joining ASIC in January 1999, Ms. Grose was a senior partner in the national Australian law firm Freehill Hillingdale & Page, specialising in corporations and securities law. She has more than 20 years experience as a corporate lawyer and played a major part in devel oping changes to the Corporations Law in Australia in her role as a member of the Corporations Law Simplification Task Force from October 1993 to March 1997. DAVID HOLTHOUSE is National Manager, International Affairs, at the Australian Stock Exchange (ASX), which he joined in February 1996.His responsibilities include fostering links with governments, businesses and market participants to ensure that ASX has a role in shaping the regional capital market environment, coordinating ASX’s international activities to ensure strategic fit, identifying cross-border listing opportunities where ASX can add value, and providing an effective protocol service on behalf of the Exchange. He has been a member of the Working Committee of the East Asian and Oceanian Stock Exchanges Federation (EAOSEF) since 1997 and is currently the Federation’s Working Committee Chairman.A key activity of the Committee during this time has been the facilitation of cross-border trading. He was formerly a career naval officer, retiring as a Rear Admiral in 1993. He is a member of the governing bodies of a number of professional and charitable organisations, and a Graduate of the Australian Institute of Company Directors. He is a Chartered Professional Engineer, and a Fellow of both the Institute of Engineers Australia and the Institute of Marine Engineers (UK). He was appointed as an Officer in the Order of Australia in 1991. xviPrincipal Authors PAMELA S. HUGHES is a securities law partner at Blake, Cassels & Graydon LLP in Toronto. Her practice focuses on international corporate finance and mergers and acquisitions transactions and advice regarding capital market regulatory reform. Ms. Hughes is a member of the team of lawyers from Blake, Cassels & Graydon involved in the ongoing Ontario Securities Commission (OSC) Policy Reformulation Project which commenced in 1995. Prior to February 1, 1995, Ms. Hughes was Director of the Capital Markets/International Markets Branch of the OS C.Ms. Hughes has also taught international securities regulation in the LL. M. programme at Osgoode Hall and the LL. B. programme at the University of Toronto, and was a contributing editor to North American Corporate Lawyer. Ms. Hughes updated the chapter on Philippines securities law in International Securities Regulation: Pacific Rim, Volumes I and II (New York: Oceana) released in 2000. In 2000, Ms. Hughes was nominated by the federal Department of Finance to the financial services roster for dispute resolution under the North American Free Trade Agreement.ROBERTA S. KARMEL is a Professor of Law and Co-Director of the Center for the Study of International Business Law at Brooklyn Law School and Of Counsel to the law firm of Kelley Drye & Warren LLP In addition, she is a . director of the Kemper Insurance Companies. She was a Commissioner of the Securities and Exchange Commission from 1977-80, and a public director of the New York Stock Exchange, Inc. from 1983-89. She received a B. A. cum laude from Radcliffe College in 1959 and an LL. B. cum laude from New York University School of Law in 1962.Professor Karmel is the author of over 30 articles in legal journals, and writes a regular column on securities regulation for the New York Law Journal. Her book entitled Regulation by Prosecution: The Securities and Exchange Commission vs. Corporate America was published by Simon and Schuster in 1982. LEE BOON NGIAP heads the securities regulatory policy function in Monetary Authority of Singapore (MAS). His division is responsible for regulatory framework development, policy coordination and market analysis of the securities, futures and asset management industries in Singapore.Prior to taking up his responsibility in the Securities and Futures Department, Mr. Lee was the Representative in the MAS office in London, responsible for spearheading the promotion of Singapore as an attractive place for UK and European financial institutions to invest and set up operatio ns. Mr. Lee joined MAS in 1986 and worked in several departments before joining the Markets and Investment Department, where he rose to become a Senior Assistant Director in the Monetary Management Division. xvii Demutualization of Stock Exchanges—Problems, Solutions and Case StudiesThere his responsibilities included the conduct of Singapore’s exchange rate and monetary policies, and management and evaluation of the foreign exchange exposures of public sector entities. He holds an honours degree in Civil Engineering from the National University of Singapore and is a Chartered Financial Analyst. NATALIE A. MARKMAN is Counsel to Commissioner Thomas J. Erickson of the US Commodity Futures Trading Commission. She provides legal counsel and analyzes such policy issues as those created by derivatives market deregulation, electronic trading, and exchange demutualization.Ms. Markman reviews and evaluates all documents submitted by staff for Commission approval, including exch ange designations, contract and rule approvals, rulemakings, opinions, and enforcement actions. Previously, she served as Special Counsel in the Commission’s Office of International Affairs, as an Attorney-Advisor in the Office of the Chief Counsel of the Commission’s Division of Trading and Markets, and as an Attorney-Advisor to Commission Administrative Law Judge George H. Painter. Ms.Markman also was a Teaching Fellow for the Foundations of American Law and Legal Education program at the Georgetown University Law Center, where she received her J. D. degree in 1993. WILLIAM PEARSON is Director in the Corporate Finance Division of the Securities and Futures Commission (SFC) in Hong Kong. He is responsible for assisting in formulating policies for the effective regulation of listed companies and the securities markets. Daily work involves monitoring and regulating corporate activities of publicly listed companies, overseeing the Stock Exchange in its listing related fu nctions, nd approving offerings of shares and debentures to the public by non-listed companies. Mr. Pearson joined the SFC as a Senior Manager in the Corporate Finance Division in 1998. Prior to that he spent nine years as a lawyer with Norton Rose, a London law firm, practicing in the areas of corporate finance and M&A. He graduated as a lawyer from King’s College, London in 1987. ALAN JOSEPH SHAW is Executive Vice-President of the Singapore Exchange Limited, Head of Risk Management and Regulation.Previously, from 1991-2000, he was National Manager, Supervision of the Australian Stock Exchange Limited, Melbourne. He was educated at the University of Melbourne, from which he received a Bachelor of Laws in 1979, a Graduate Diploma of Public Policy in 1988, and a Master of Arts in Public Policy in 1994. From 1980-91, he served as a Principal xviii Principal Authors Legal Officer for the National Companies and Securities Commission, as a Judge’s Associate, and as a Barris ter. He has authored a number of articles on company law. xix Abbreviations ABBREVIATIONSAmex APEC Archipelago Archipelago Exchange ASIC ASTC ASX ATS BOT CATS CBA CBI CBOT CCASS CDNX CDS CFE CFTC CGE CME CMP CNS CSE CSRC DTF EBOT ECM ECN Australian Securities and Investments Commission Australian Settlement and Transfer Corporation Pty Ltd Australian Stock Exchange alternative trading system Bank of Thailand computer assisted trading system Colombo Brokers Association Canadian-based interlisted issuer Chicago Board of Trade Central Clearing and Settlement System Canadian Venture Exchange Central Depository System communication front-end system Commodity Futures Trading Commission Committee on the Governance of the Exchanges Chicago Mercantile Exchange Capital Market Masterplan Continuous Net Settlement Colombo Stock Exchange China Securities Regulatory Commission derivatives transaction execution facility exempt board of trade exempt commercial market electronic communications netwo rk American Stock Exchange Asia Pacific Economic Cooperation Archipelago Holdings, LLC Archipelago Exchange, LLC xxi Demutualization of Stock Exchanges—Problems, Solutions and Case Studies ETF ETP FCM FIBV GEM HIBOR HKCC HKEC HKEx HKFE HKFECC HKSCC IDA IISL IMM IOM IOSCO IPO KLSE KULBER LFX LSE MAS MCD MDEX ME MESDAQ MkSE MMCD MOF MOU MSE xchange traded fund equity trading permit futures commission merchant International Federation of Stock Exchanges Growth and Emerging Market Hong Kong Interbank Offered Rate HKFE Clearing Company Hong Kong Exchanges and Clearing Hong Kong Exchanges and Clearing Limited Hong Kong Futures Exchange Limited HKFE Clearing Corporation Limited Hong Kong Securities Clearing Company Investment Dealers Association India Index Services & Products Limited International Monetary Market Index and Option Market International Organization of Securities Commissions Initial Public Offer Kuala Lumpur Stock Exchange KLSE-Bernama Real-Time Information Services L abuan International Financial Exchange London Stock Exchange Plc Monetary Authority of Singapore Malaysian Central Depository Malaysia Derivatives Exchange Montreal Exchange Malaysian Exchange of Securities Dealing and Automated Quotation Bhd Makati Stock Exchange Mark to Market Collateral Deposit Ministry of Finance memorandum of understanding Manila Stock Exchange xxii Abbreviations MSRS NASD NASDAQ NASDR NSE NYSE OECD OM OSC OTC PCX PCX PCX Holdings PCXE PSE REC RIIAM SAFE SC SCA SCANS SCCP SCORE SCH SEA SEC SEHK SEL SEOCH SES SET Malaysian Share Registration Services National Association of Securities Dealers, Inc. NASDAQ Stock Market, Inc. NASD Regulation, Inc. National Stock Exchange of India New York Stock Exchange Organisation for Economic Co-operation and Development OM Gruppen AB Ontario Securities Commission over-the-counter Pacific Exchange PCX Equities, Inc. PCX Holdings, Inc.PCX Equities, Inc. Philippine Stock Exchange, Inc. recognized exchange controller Research Inst itute of Investment Analysts Malaysia South Asian Federation of Exchanges Securities Commission Securities Commission Act 1993 Securities Clearing Automated Network Services Sdn Bhd Securities Clearing Corporation of the Philippines System on Computerised Order Routing and Execution Securities Clearing House Securities and Exchange Act of 1992 Securities and Exchange Commission The Stock Exchange of Hong Kong Limited Taiwanese Securities and Exchange Law SEHK Options Clearing House Limited Stock Exchange of Singapore Stock Exchange of Thailand xxiiiDemutualization of Stock Exchanges—Problems, Solutions and Case Studies SFA SFC SFE SGX SGX-ST SIA SIIS SIMEX SIPF SME SRC SRO STAMP TBDC TSD TSE TSE RS TSE TSEC TSI Securities and Futures Act Securities and Future Commission SFE Corporation Limited (formally known as Sydney Futures Exchange Limited) Singapore Exchange Limited Singapore Exchange Securities Trading Ltd Securities Industry Act 1983 Special Isolated Immediate Settleme nt Singapore International Monetary Exchange Limited Securities Investors Protection Fund Small Medium Enterprise Board Securities Regulation Code Self-regulatory organization standard message protocol Thai Bond Dealing Center Thailand Securities Depository Co. , Ltd.The Toronto Stock Exchange TSE regulatory services Tokyo Stock Exchange Taiwan Stock Exchange Corporation Thailand Securities Institute xxiv PART I Issues Involved in Stock Exchange Demutualization Demutualization of Asian Stock Exchanges—Critical Issues and Challenges 1 Demutualization of Asian Stock Exchanges— Critical Issues and Challenges Shamshad Akhtar 1 1. 1 Introduction Stock exchanges offer a host of services to listing companies. These include: (i) liquidity, (ii) execution of services, (iii) signaling function for listed companies, (iv) monitoring of trading to prevent manipulation and insider trading, (v) standard rules to reduce transaction costs, and (vi) clearing of buy and order transaction s.Traditionally, stock exchanges operating as a â€Å"club of brokers† offered these services as monopoly operators serving largely under a mutual governance structure. The members of the club enjoyed rights of ownership, decision-making (one member, one vote), and trading. Value enhancement of the exchange was achieved by restricting access. Stock exchanges are now increasingly changing their business model and restructuring themselves across the world due to the simultaneous convergence of a number of powerful developments. The most notable of these has been the: (i) rapid advancement and innovation 1 Director, Governance, Finance and Trade, East and Central Asia Department, Asian Development Bank. 3 Part I: Issues Involved in Stock Exchange Demutualization n technology that has facilitated alternative trading systems (ATS) including electronic communication networks (ECNs); and (ii) growing market competition and integration as well as globalization induced partly by cross -border listing and portfolio flows, etc. Together these developments have eroded the significance of physical national stock exchanges and their trading floors. Consequently, across the globe stock exchanges are now rethinking their business strategy and model in order to find ways of how best to survive. In the process, exchanges have evolved towards new corporate, legal and business models to strengthen governance and face the competition.This process of transformation from members' associations into for-profit corporations is referred to as demutualization. There is a great need to distill lessons from the rapidly evolving experience with demutualization and synthesize both the normative and positive aspects of this exciting and relatively new structure so that developing countries can take advantage of it. This paper, therefore, aims to provide basic perspectives and dimensions of demutualization based on a review of literature and experience. In the process it explains: (i) Wh at is demutualization and how significant has it been? (ii) What factors have been driving the demutualization of exchanges? iii) What ownership, legal and strategic approaches are being adopted in the process of demutualization? (iv) What are the principal benefits of demutualization? (v) What regulatory challenges and responses does a demutualized exchange face? (vi) Have the demutualized exchanges been financially viable? 1. 2 Demutualization: Its Definition, Size and Significance Demutualization, in the strictest sense, refers to the change in legal status of the exchange from a mutual association with one vote per member (and possibly consensus-based decision making), into a company limited by shares, with one vote per share (with majority-based decision making).Demutualization makes sense if it induces a change in the exchange’s objective from managing the interests of a closed 4 Demutualization of Asian Stock Exchanges—Critical Issues and Challenges member-based organization with a central focus on providing services for the benefit primarily of the members/brokers and keeping costs and investments limited to financing agreed by members, into a company set up with the objective of maximizing the value of the equity shares by focusing on generating profits from servicing the demands of their customers (brokers and investors) in a competitive manner. The number of exchanges that have privatized or listed has been increasing since the Stockholm Stock Exchange demutualized in 1993.In 1999, 11 stock exchanges had been privatized or listed and this number rose to 21 by early 2002, with several other exchanges either considering demutualization or already having stated their intent to do so. Of the World Federation of Stock Exchanges-formerly the International Federation of Stock Exchanges (FIBV)-member exchanges, around 52% of stock market capitalization is accounted for by demutualized exchanges. In Asia, demutualized stock exchanges including the Tokyo Stock Exchange now account for 76 % of the region's market capitalization (Figures 1. 1 and 1. 2). Figure 1. 1. Market Capitalization FIBV Stock Exchanges (2001) Figure 1. 2. Market Capitalization Stock Exchanges in Asia (2001) Demutualized 52%Not demutualized 48% Demutualized 76% Not demutualized 24% Source: International Federation of Stock Exchanges (FIBV) Source: International Federation of Stock Exchanges (FIBV) 1. 3 Motivation and Driving Factors for Demutualization Today, exchanges are no longer the sole primary and secondary market makers or the sole service providers of trade execution, signaling or other activities. This is largely because of the widespread proliferation of ATS and ECNs that have been supported by technological revolution and introduction of high capacity hardware, software packages and Internet facilities. ATS/ECNs have allowed efficient and effective matching 5Part I: Issues Involved in Stock Exchange Demutualization of the buy and sell orders of customers at lower transaction costs, while offering price transparency, trader anonymity and extended trading hours. Large global brokers are able to price-match within their own order-stock and only report the net position as a trade to the exchange (thus avoiding transaction costs). Given the competitive edge, the market share of the ECNs has grown. In 2002, ECNs have accounted for 45% of NASDAQ shares traded (compared to 25. 5% in 1999) – although they only accounted for about 5% of the listed shares traded. Of the several ECNs, Island ECN alone accounted for 32% of the ECN's market share.Instinet makes up another 29%, ArcaEx 27. 2% (formed through the merger of Archipelago and REDIBook), Bloomberg Tradebook 6. 3% and Brut ECN 5. 3%. The rest is accounted by other networks. 2 Having attracted substantial trading, ECNs are also entering into strategic alliances or tie ups with other exchanges or are offering services such as quotes and listing shares to further raise re venues. The growing competitive pressure has also triggered a wave of restructuring and mergers and alliances among securities markets to maximize economies of scale, accessibility and market reach, while providing global trade facilities through around the clock trading.For instance: (i) Euronext was established by the merger of former national exchanges in France, the Netherlands, Belgium and Portugal and the integrated equity trading markets of the northern-European countries of Sweden, Finland, Denmark and Norway; (ii) in the derivatives markets, a/c/e, the trading platform of Eurex and Chicago Board of Trade (CBOT), and Globex (Chicago Mercantile Exchange, Liffe, Singapore and others), have already formed global alliances with participants from all time zones, thus creating 24 hour trading markets; and (iii) NASDAQ has developed global alliances/interconnections to attract more liquidity for the United States and regional securities markets. NASDAQ has structured agreements wit h Europe, Japan, Hong Kong and Canada and is positioned for similar arrangements with China, Latin America and Middle East. In Asia, several exchanges have trading links and dual-listing agreements with the United States-based NASDAQ. 2 Global Finance Staff Research. 2002. National Association of Securities Dealers (NASD). JP Morgan, H. 6 Demutualization of Asian Stock Exchanges—Critical Issues and Challenges The market integration has encouraged a process of disintermediation.With the emergence of new structures, there is no need for formal floors of stock exchanges or financial market intermediaries and participants, as they do not add value (to match the cost) to trading of securities. Exchanges with low market capitalization and weak trading volumes have had to particularly re-examine their operations and organizations with the view to increasing their competitive offering and price mix to minimize further diversion of trading volumes. Summarizing the emerging issues, a r ecent World Bank study3 concluded that: â€Å"Powerful trends of internationalization and migration of order flow are putting pressures on stock exchanges around the world. For some exchanges, already more than half of trading and listing has migrated offshore†¦ Migration makes it difficult for countries to sustain a full-fledged local stock exchange.As trading volumes further decrease, financing the fixed overhead of maintaining market oversight, clearing and settlement systems, †¦ and generating enough business for local investment banks, accounting firms, and other support services will become even harder, especially for smaller emerging markets. The trend towards increased migration will thus make it more difficult for small exchanges to survive. † [page 18] In order to survive in this environment, exchanges need to diversify and move towards commercially oriented business practices with greater focus on improving efficiency, accessibility and ease of use of the ir systems. Since exchanges have higher overhead costs (as compared toECNs) due to (among other things) cost of building and facilities, they need to strive harder to achieve profitability and economies of scale, while offering competitive services and fees compatible to those being provided by the ECNs. These considerations have driven exchanges to consider alliances and consolidation. By merging two exchanges, the exchange can multiply the volume at the same overhead cost (provided cost cutting synergies are fully explored). It can thus offer to the investors and brokers more listed securities for trading on the same platform. There are forecasts available that indicate that by 2010, there will be fewer than five major stock exchanges; and, perhaps two or three of these will be entirely electronic markets—which have not yet been established. 4 3 4 Claessens, Stijn, et. l. 2002. Explaining the Migration of Stocks from Exchanges in Emerging Economies to International Centers. World Bank Working Paper No. 2816. Young, Patrick. 1999. Capital Market Revolution: The Future of Markets in an Online World. Harlow: Financial Times. 7 Part I: Issues Involved in Stock Exchange Demutualization 1. 4 From Mutuality to Demutualization of Exchange The transformation of exchanges from mutual to demutualized structure involves two key features: (i) a change in the ownership structure, and (ii) a change in legal as well as organizational form. Both need to be accompanied by adequate safeguards to ensure appropriate governance.Depending on the nature of ownership and legal forms adopted, the demutualized exchange—given their corporate model and facing growing competitive pressures—lends itself to focusing on evolving strategic positioning which, depending on a number of conditions, could involve greater market consolidation, vertical integration and product diversification. 1. 4. 1 Ownership Structure The transformation from the mutual member-based to demutu alized exchange involves issues of transferability of ownership from members to nonmembers. There are various ways that dilution of membership can be achieved. Sequentially, it involves conversion of existing member seats by monetizing these and assigning a certain value per seat.Once the valuation is done, the members can opt to convert their membership to share ownership or to sell off their interest to nonmembers. In most cases of demutualization of exchange, members have opted to retain their share ownership. A listing of equity shares in the exchange facilitates the unlocking of the members' equity and buy out of the interest of the traders, while leading to the monetization of the value of the members' seats. An entity with freely transferable shares, rather than membership rights, can form equity-swap-based strategic alliances or mergers with other exchanges, domestically or in other countries or time zones. Such alliances are stronger and offer greater credibility than pure cooperation agreements.To avoid stock exchanges operating in special or limited interests, securities regulators often place restriction on ownership by one holder or a group of holders to non-controlling stakes of 5-10%. Limits on ownership stakes could affect potential take-over by other exchanges. Such take-overs could have merit in terms of efficiency and economies of scale of the market especially where more efficient participants acquire inefficient ones. Recognizing the synergies of take-overs, most demutualized exchanges have provisions in place to allow other 8 Demutualization of Asian Stock Exchanges—Critical Issues and Challenges exchanges, or technology partners, the possibility of acquiring or swapping strategic stakes.The reluctance to relinquish control to strategic partners or owners remains however one reason why non-equity, swapbased cooperative alliances have been more prolific in the exchange industry. 5 Indeed, several hostile take-over attempts (includin g OM Gruppen's moves to acquire the London Stock Exchange in 2000, and the bidding war for Sydney Futures Exchange by Australian Stock Exchange and Computershare in 1999) have failed due to the voting strength still exerted by the brokers (Table 1. 1). 1. 4. 2 Legal and Company Structure Most stock exchanges are registered as private limited companies with a paid-up capital base, while others operate as member associations or cooperative arrangements.At the end of 2000, FIBV statistics indicates that 90% of its member exchanges, accounting for 60% of market capitalization, were private limited companies. Almost 46% of these were legal company exchanges with inside ownership. Around 25% (accounting for 21% of market capitalization) of the exchanges had been privatized, 13% (accounting for 8% of market capitalization) were registered as listed companies6 and the remaining 17% had other types of status—with some being state-owned or semi-public entities (such as the Shenzhen and Shanghai Stock Exchanges (SZSE and SHSE). As evident in Table 1. 2, in Asia, with the exception of SZSE and SHSE, most of the exchanges are legal entities registered as private limited companies.So far, five exchanges in Asia have been fully demutualized, with three of these listed on their own exchange, and another two have announced plans to demutualize in 2003. The legal structure for the demutualized exchange is based on considerations similar to that for any profit-making company including decisions on number of shareholders (partnership vs. corporation), voting procedures, limitation of liability (liability limited to equity invested vs. joint and several liability for all debts), accounting and reporting requirements (based on taxation laws and on partners/shareholders' access to information of the company) and distribution of dividends (re-investment 5 6Interestingly, this is similar to another rapidly globalizing industry with national quasimonopolistic companies—th e airline industry—in which global cooperation alliances have proven very important for customer retention. Notably half (of six) of the exchanges that have listed themselves are in Asia. 9 Part I: Issues Involved in Stock Exchange Demutualization Table 1. 1. Asian Stock Exchanges: Shareholding Structure SHAREHOLDING LIMIT Australian Stock Exchange (ASX) Initially maximum shareholding limit was 5%, but the Financial Services Reform Act raised this to 15% in March 2002. Higher shareholding can be allowed if it is in national interest subject to approval of the Minister for Financial Services and Regulation.Singapore Exchange Limited (SGX) Maximum shareholding limit is 5% and can be higher if approved by the Monetary Authority of Singapore (MAS). In 2001, MAS announced that, with its approval, strategic investors and fund managers who invest pools of consumer funds could acquire up to 10% of share-holding. SHAREHOLDING STRUCTURE As of June 2001, issued and paid-up capital of AS X amounted to A$106,282,000. After listing, ASX’s shareholders rose from 606 to 16,313. Besides individual investors, the large domestic and international fund managers subscribed to ASX equity including Chase Manhattan Nominees Ltd. whose holding is 6. 9%, National Nominees Ltd. 3. 5%, followed by AMP Life Ltd. (2. %), Westpac Custodian Nominees Pty. Ltd. (2. 11%) and Citicorp Nominees Pty. Ltd. (2. 07%). The top 20 shareholders account for 27. 3% of issued capital. SGX has authorized share capital of S$1,000,000,00. As of August 2001, its issued and paid-up capital stood at S$10,000,000. The top shareholders include SEL Holdings Pte. Ltd with 25% of total shares (but owing to the restrictions in the exercise of votes attached to shares, SEL is not regarded as a substantial shareholder), Raffles Nominee Pte. Ltd. (12. 9%), followed by DBS Nominees Pte. Ltd. (9. 9%), Overseas-Chinese Bank Nominees Ltd. (5. 3%) and HSBC Singapore Ltd. and Citibank Singapore (each over 4. %), a nd others with significant stake in the range of 0. 60-2%. The top 20 shareholders account for 77. 8% of total shares. Out of the shares issued to SEL, the Company made an Initial Public Offer (IPO) and a private placement. The IPO raised S$470 million. Consequently, the issued and fully paid share capital of SGX increased from S$61,670 as at 30 June 2000 to S$10 million as at 16 November 2000. HKEx has authorized share capital of HK$2,000,000,000. As of December 2001, issued and fully paid capital amount to HK$1,040,664,846. As of March 2002, the two Central Clearing and Settlement System (CCASS) Participants held 28. 8%, and 12. 1% of HKEx’s issued share capital.SFC granted approval to these two entities as minority controllers of HKEx on the basis that the shares are held in custody for their clients. Hong Kong Exchanges and Clearing Limited (HKEx) Maximum shareholding limit is 5%. The Securities and Futures Commission (SFC), in consultation with the Finance Secretary, may give approval to a person to hold more than 5% where it can be demonstrated to be in the interest of the public or the investing public. Philippine Stock Exchange (PSE) The Securities Regulation Code imposes a 5% maximum shareholding limit for individuals and individual companies and 20% for industry or business groups. The demutualized PSE has an authorized capital stock of P36. million, with subscribed and fully paid-up capital base of P9. 2 million representing a portion of the members’ total contribution of P286. 6 million as of 31 December 2000. Each of the 184 member-brokers was granted 50,000 common shares of the new PSE at a par value of P1. 00 per share. The remaining members’ contribution of P277. 4 million will be booked under additional paid-in surplus. Prior to demutualization, TSE had a capital of Y11,500 million. After demutualization, TSE raised it to Y22,874 million by issuing 2,300,000 shares for equal allotment to its members. The total number of au thorized shares after demutualization is 9,200,000. TSE now has 114 shareholders.Tokyo Stock Exchange (TSE) Under the Securities and Exchange Law, there is a 5% maximum shareholding limit. Source: Stock Exchanges. Latest Annual Reports 10 Demutualization of Asian Stock Exchanges—Critical Issues and Challenges Table 1. 2. Asian Stock Exchanges: Legal and Corporate Structure STOCK EXCHANGE TSE LEGAL FORM TSE was demutualized on 1 November 2001 Legal Status: Company SGX was demutualized in December 1999 Legal Status: Company (for profit). Singapore Exchange Securities Trading Limited (SGX-ST), the stock exchange, is a wholly-owned subsidiary of SGX. HKEx was demutualized in March 2000 Legal Status: Company (for profit) with the Stock Exchange of Hong Kong Limited (SEHK) set up as a wholly- owned subsidiary of HKEx.ASX was demutualized on 13 October 1998 Legal Status: Company (for profit) LISTING STATUS Not listed (plans to list in FY2005) SGX On 23 November 2000, the Company was admitted for listing of SGX-ST. SGX became a public-listed company with 1,000,000,000 ordinary shares outstanding. HKEx Listed ASX ASX was listed on its own exchange on 14 October 1998. When ASX shares were quoted on 14 October 1998, they closed at A$4. 25; sub-sequently they rose as high as A$16 by 16 March 1999. By the end of 1999, they traded at a range of A$10 to A$11, valuing the company at between A$1 billion and A$1. 1 billion. Not Listed PSE PSE was demutualized in August 2001 Legal Status: CompanySource: Stock Exchanges. Latest Annual Reports needs vs. distribution to partners, taxation). In most jurisdictions, a limited liability company has been observed to be the traditional and preferred option for profit-making ventures involving more than a close group of partners. The methods for transforming an association into a limited liability company varies between jurisdictions, but in principle, the existing members agree to transfer the assets and operations of their associ ation to a newly formed company, in exchange for shares in that new company. 11 Part I: Issues Involved in Stock Exchange Demutualization 1. 5 Benefits of Demutualization of Exchanges 1. 5. Improvements in Corporate Governance Exchanges, when run as mutual associations, clubs and cooperatives of traders and brokers allow members exclusive rights of access to trading systems and platforms. Operating under this mutual structure, exchanges enjoyed quasi or full monopoly on trading and they derived profits from the intermediation of nonmember transactions. Since members under the mutual structure were owners of the exchange, they imposed rights to trading and disallowed direct access to the trading floor to any outsiders. Brokers inadvertently resisted changes if these entailed additional costs, loss of revenue or competitive threat.This resistance eventually impeded the ability of the company to react quickly to a rapidly changing market environment. Also, in some developing countries if the exchanges enjoyed a legal or decreed national monopoly, government-appointed officials and stakeholder representatives were often represented on the board. While in the short-run such appointments may have proved conducive to mitigating entrenched vested interests, in the long-run these can prove counter productive leading to unhealthy government interference. With the changing economics of automated auction trading and its easy access electronically, the economics of member-cum-trading floor based exchanges has lost its merit.As a result, it has generated pressures to replace the age-old reliance on one member, one vote and the committee-based decision structure where control is vested with the interest groups that have exclusive rights of intermediation at exchange. Under demutualization, there is increased acceptance to separation of ownership from membership that automatically provides trading rights. This segregation helps introduce effective corporate governance if: (i) there are accompanying improvements in the incentive structure,7 which allow the exchanges to sell their equity stakes to nonmembers and outsiders, (ii) decision making is based on this new ownership structure (not on rights of intermediation), and (iii) when there is an effective oversight of a governing board and a company structure. 7 Steill Ben 2002.Changes in the Ownership and Governance of Securities Exchanges: Causes and Consequence. In Brookings-Wharton Papers on Financial Services. Washington D. C. : Brooking Institution Press. 12 Demutualization of Asian Stock Exchanges—Critical Issues and Challenges Since under demutualization the economic ownership of the exchange is separated from trading membership, it is not appropriate that interest groups (such as the trading members) have exclusive authority over the decisions of exchange. After demutualization, some exchanges have granted less than 50% of the voting rights to the broker members on the board of the exchange (see Table 1. 3).To gradually decrease broker influence on the board, the exchanges have appointed independent directors or directors that are nontrading owners. After demutualization, the appointment of government appointed officials (a common feature of exchanges in developing economies) has by and large been viewed as controversial given that the demutualized exchange is a private sector company operating in a competitive environment. In environments where broker influences are often daunting, the continued role of the representative(s) of the securities regulator can support the transition of exchange till such time as the regulation is changed to allow the exchanges to operate in a fully competitive manner.Besides appropriate board representation, it is important that the management of the exchange is fully qualified and motivated to act not only in the best interests of the shareholders, but also to conduct the business in a prudent manner so as not to disrupt the orderly and fair trading in the capital markets. To ensure that this public interest is satisfied, â€Å"fit-and-proper† screening of the board and management, similar to tests put in place in the banking regulations of many jurisdictions, could be undertaken. The management should be accountable to the board, which would determine management's appointment and remuneration, supervise the strategic direction and audit the financial and operational results, including risk management, and if needed, effect the removal of management.To ensure the effective supervision and auditing of management, it would seem prudent to ensure that a majority of board members are truly independent directors. To remain competitive, a stock exchange must follow international best practices in ethics and procedures. This is necessary in order to ensure that institutional investors do not shift their investments to other alternatives perceived to be more fair or secure. Therefore, it is in the profit-motivated exchange's best interest to ensure fair and transparent practices; and, as such, good corporate governance needs to be an integral part of the exchange once it is driven by the profit motive. 13Part I: Issues Involved in Stock Exchange Demutualization Table 1. 3. Asian Stock Exchanges: Board Representation STOCK EXCHANGE ASX BOARD REPRESENTATION/COMPOSITION 9 member board of directors. Of ASX's 9 directors, 4 are ASX Members/ Affiliates. 11 member board of directors. Of SGX 11 directors, 4 represent broker interests. SGX plans to broaden membership base by attracting new international members both global and regional securities houses. In addition, SGX will be introducing a new membership structure that allows new and existing members to choose between trading-only membership or clearing-only membership or both trading and clearing membership. Central Depository Pte. CDP) clearing rules have been revised to incorporate the admission requirements and expect to launch the new membersh ip structure in the third quarter of 2002. The board comprises 8 Public Interest Directors appointed by the Financial Secretary to represent public and market interests, 6 Directors elected by shareholders, and the Chief Executive of HKEx who is an ex-officio board member. Pursuant to the Exchanges and Clearing Houses (Merger) Ordinance, the number of Public Interest Directors will be reduced to no more than the number of elected Directors immediately following the annual general meeting of HKEx in 2003. 51% of the board (8 of 15 directors) should be independent. 11 member board of directors, of whom 6 are outside directors. SGX HKEx PSE TSESource: Stock Exchanges. Latest Annual Reports 1. 5. 2 Opening Up of Trading Rights of Exchanges Consistent with the for-profit motive, the demutualized exchanges in Asia have included provisions to admit new trading partners (Table 1. 4) and permitted eligible applicants (new customers) unrestricted commercial access to the services of exchange. Some exchanges, however, adopted a moratarium period on the issuance of new trading rights. If share ownership were a requirement for trading membership, it would be relatively easy for existing members to protect their market share by refusing to sell existing or issue any new shares, thus barring new entrants.If new shares can only be issued to the active trading members, then the public, financial institutions, institutional investors and others would generally not be able to invest. The question of a broader ownership 14 Demutualization of Asian Stock Exchanges—Critical Issues and Challenges Table 1. 4. Asian Stock Exchanges: Trading Rights and Dividend for Profit-Seeking STOCK EXCHANGE ASX TRADING RIGHTS Trading rights may be acquired through application with ASX or from an existing Participant. Trading rights have to be acquired through application with SGX, as these cannot be secured through transfer from an existing member. In July 2000, SGX opened the securities mar ket to new members, and five new member firms joined in 2000.SGX also changed its rules to allow a single legal entity to be a member firm in each of the securities and derivatives markets thereby furthering their members' opportunities to trade in both markets. Access to the markets may be obtained through acquisition of trading rights from existing members of the exchanges and from HKEx after the expiry of a two-year moratorium on March 2002. Trading rights issued by HKEx (other than those automatically conferred to the exchange shareholders on the effective date) will not be transferable. For a further period of 2 years thereafter, no new trading rights will be issued for less than HK$3. 0 million per Stock Exchange Trading Right or for less than HK$1. 5 million per Futures Exchange Trading Right.An entity may acquire trading right from an existing trading participant (with approval of TSE), or through application with TSE. Trading right can be acquired through purchase from an e xisting trading participant. PSE temporarily imposed a moratorium on the issuance of new trading rights and limits it to its present number of 184, transferable for an unlimited period of time. PAYOUT RATIO 70% of net profit after tax. 85% SGX HKEx 46% TSE n. a. PSE n. a. Source: Stock Exchanges. Latest Annual Reports base of the exchange (as a public listed company) is critical in situations where exchanges need to raise funds for future investments. Broader ownership would help avoid potentially large swings in the value based on the trading of a limited number of shares only.With share ownership separated from the right to trade, the question of the compensation of existing trading members arises especially since trading rights are granted freely to new members when the existing 15 Part I: Issues Involved in Stock Exchange Demutualization members had to acquire their trading memberships. If existing shareholders continue to retain their shares, then they would enjoy the trading r ights granted to the shareholders and there would be no need to compensate them for trading rights. This is argued largely because for both the old and new shareholders, the economic value that the shares now represent would always be inclusive of the right to trade provided such rights have been granted.In order for shares to have economic value, there must be an expectation of dividends, at some point in the future. The introduction of a dividend policy (which does not exist in mutual exchanges), coupled with a listing of the shares, thus transfers the value of stock exchange share ownership from the right to trade, to the right to receive dividends and trade the shares (see Table 1. 4). These factors should in theory minimize the resistance to the demutualization of exchanges by the brokers. However, a moratorium (limited in time) on the granting of new trading rights has often been introduced to lessen the competitive impact on smaller brokers. 1. 5. Restructuring and Alliances of Exchanges After being demutualized, most exchanges have revisited their commercial strategy to improve viability and enhance business prospects. Exchanges have opted to: (i) consolidate, merge and/or integrate their domestic markets; (ii) build alliances by establishing cross-border linkages with other exchanges within or outside the region; and (iii) merge with other exchanges—a phenomena more predominant thus far in Europe. In Asia, the exchanges have by and large opted thus far for (i) and (ii). Emphasis has been largely to re-group businesses to broaden the markets, offer issuers and investors better distribution networks and improved liquidity.Predominant in-country mergers or restructuring have taken place in Singapore, Hong Kong, Australia and Japan, and in early 2002, the Kuala Lumpur Stock Exchange (KLSE) merged with MESDAQ (Table 1. 5). In-country restructuring of exchanges has involved: (i) Merger of two or more exchanges into a single viable nationallevel compa ny, which would be of sufficient scale to be an interesting partner for other (foreign) exchanges, and as a listed company for investors to consider. While these mergers lead to 16 Demutualization of Asian Stock Exchanges—Critical Issues and Challenges Table 1. 5. Asian Exchanges: Mergers and Alliances STOCK EXCHANGE TSE MERGERS PRIOR TO DEMUTUALIZATION Hiroshima and Niigata Stock Exchanges merged with the TSE in March 2000. ALLIANCES W

Effect of video games on children Essay

During the course of this research, a number of significant facts were found. The original topic question for the research was â€Å"the psychological and physical effect of video games on children†. The amount of information researched on the psychological effect was a lot and thus the topic question for the research was then changed to â€Å"the psychological effect of video games on children†. The main reason for researching this topic was the fact that there are a lot of young children in the world who play immensely violent games. Many children and their parents ignore the game rating. Many parents do not understand the adverse effect that those video games would have on the young child’s growing brain. Research which is discussed below in detail has proven that violent video games have a great psychological effect on the children which causes them to become aggressive adolescence. This in turn affects their social and personal life in a major way. The researched information shows that violent video games are clearly harmful to children and both parents and children must obey the game rating if they want healthy and rather peaceful children. Video games have been available to the customer for around 30 years now. The games have evolved greatly. They merely started off as 2D arcade games and now they have evolved to 4D virtual reality. One of the main researched subtopic has been video games and the time children spend playing them. The time that children spent playing video games varies greatly according to gender. A research/ study conducted in 2004 by Gentile, Lynch, Linder & Walsh stated that adolescent girls played video games for an average of 5 hours a week whereas boys played an average of 13 hours. Now this extended amount of time spent playing video games affects the children in many ways. The time which they could’ve spent studying is spent playing video games. This may appear to be a decline in academic achievement. The same study conducted by Gentile, Lynch, Linder & Walsh also states that teens also tend to become more aggressive in nature, more prone to confronting their teachers and also get into a lot of fights with their peers. The research shows that video games not only affect the child psychologically but also socially. It affects the person’s relationship with friends and close ones. In a study by Walsh in 2000, majority of the teenagers admitted that their parents don’t impose time limit. In a survey conducted by myself, the results clearly show that 30% of the people play video games more than four times a week. Another deeply researched subtopic has been video game rating. Parents tend to ignore the game ratings of a game and also the warnings on the game that say that they are unsuitable for children. A research authorised by the UK game industry found that parents let young children play adult games. The main reason for this was the fact that parents thought their children were mature enough to play games way beyond their age level. This thought process of parents is much objected by Modulum researcher Jurgen Freund. He suggests that parents think their children are mature and that the game will not have an influence on the child. Parents seem to perceive age ratings as a guide but not as a prohibition according to him. It has been reported that 39% of UK parents ignore the rating on videogames. A survey conducted by myself indicated that 50% of the children do not follow the game ratings. Video games are very addictive. This is because, once the player engages into the game, he/she is in the game world. The real world is switched off for him/her for that period of time. As the player has no idea about the real world, he/she do not realise the amount of time spent playing the game. Addiction of video games has caused many serious effects on children over the past years. These serious effects also include death. On December 27th 2004, a thirteen year old Warcraft player committed suicide by jumping off a building in order to join the heroes of the game. This aim of joining the heroes was indicated by his suicide note. In conclusion it is clearly evident that video games have a very negative effect on children and their growth. Firstly, children should be monitored throughout their young life so that nothing bad affects them in their childhood as this will affect the child in his later years. Parents should also have a hold on the amount of time the child spends playing video games. The time spent should not interfere with the time that the child could have spent playing with friends and socialising. Parents should strictly follow the game ratings and should instil the idea of following the game rating into their children. Young children should not play adult games. This should be done because violent games cause the children to become more aggressive and in turn it grows the kids into violent adolescents. These violent adolescents grow into aggressive, angry and rather violent adults. If the person is violent it is highly likely that that person will not have many friends and will not often socialise. This will cause that person to be lonely and rather depressed. The parents should enforce strong rules regarding the time spent playing the video games and set a certain time weekly that the children may play the video games. The parents must also strictly follow the game ratings and make sure that they only buy games for their children which fit their age group. Parents should make sure that their kids do not become ‘gameholics’ but rather should spend more time with friends and be out socially. If all the above are followed by parents then there is a reduced risk of psychological problems developing in children from a very young age. If looked carefully it is evident that parents play a very important role in the child’s growth and development. Gentile, D. A. , Lynch, P. , Linder, J. & Walsh, D. (2004). The effects of violent video game habits on adolescent hostility, aggressive behaviors, and school performance. Journal of Adolescence, 27, 5-22 [ 2 ]. Walsh, D. (2000). Interactive violence and children: Testimony submitted to the Committee on Commerce, Science, and Transportation, United States Senate. (March 21, 2000. ) [ 3 ]. Andrea Norcia, (26/06/2010) The Impact of Video Games on Children, http://www. pamf. org/preteen/parents/videogames. html, 18/11/2011 [ 4 ]. Swiss research association [ 5 ]. Chief executive officer of Modulum [ 6 ]. Alfred Hermida , (27/04/2010) Parents ’ignore game age ratings’ , http://news. bbc. co. uk/2/hi/technology/4118270. stm, 17/11/2011 [ 7 ]. Ricky Lam, (November 7, 2010 ) Top 10 Cases of Extreme Game Addiction, http://listverse. com/2010/11/07/top-10-cases-of-extreme-game-addiction/, 16/11/2011.

The Early Years Curriculum Research Paper Example | Topics and Well Written Essays - 2500 words

The Early Years Curriculum - Research Paper Example Such childhood is viewed as necessary to provide the foundation for realizing children's abilities and talents as they grow up. The EYFS assures parents that their children achieve this goal. The EYFS undertakes several tasks in ensuring that the outcomes of Every Child Matters are achieved by setting the standards, providing for quality of opportunity, creating the framework for partnership working, improving quality and consistency, and laying a secure foundation for future learning (Statutory Framework 2008). Learning through EYFS is done through a principled approach which the following are embedded: a unique child, positive relationships, enabling environments, and learning and development. The observation on curriculum took place on Nov. 7, 2008 at Odessa Primary School while the other one was at Montessori Day Nursery which opened in 1998. It was noticed that both settings recognized the areas of learning and early learning goals of the EYFS which include personal, social, and emotional development, communication, language, and literacy, mathematics development, knowledge and understanding of the world, physical development, and creative development. However the delivery of these goals differed in the two observed settings, which will be mentioned in this paper. One of the underpinning policies of EYFS is "every child matters," which seemed to have been overlooked or neglected by the Montessori Day Nursery in t... y Nursery in that staff ignored other children who bullied others and threw objects on them, such as the incident in which one boy threw a metal car and hit another boy, to which a staff treated it as we don't hit our friends, which was contrary to her appeasement of the other child as it was an accident. Based on the observation, the Montessori Day Nursery did not seem to follow in practice the overarching aim of EYFS, which is to help young children achieve the five outcomes of Every Child Matters which include, staying safe. The bullied children seemed to experience lack of safety by the bullies, in which the staff tended to treat the situation lightly. Enjoying and achieving seems a lacking element in the setting, since there were plenty of distractions while the class teacher was reading a story, affecting the quality of the experience as well as other's desire on the activity. Most staff members ignored the children's bad behavior as if nothing happened, resulting in non-absorp tion and disturbance on the part of other children who were willing to listen and learn from the story. In fact, when the boy who hit another with a metal toy car was told we don't hit our friends, the teacher started to read the book again, in which the boy started to punch and push other children to which she did not pay attention and just carried on with the reading. When asked if she planned the activities in advance, the activity sheet shown did not match the actual activities conducted since according to the teacher, the activity sheet only served to guide her. The Montessori Day Nursery however heeded to the provision set by the EYFS in relation to housing young children of varying ages, from birth to the end of the academic years in which the child has his/her fifth birthday. The

Capital budgeting decision Coursework Example | Topics and Well Written Essays - 250 words

Capital budgeting decision - Coursework Example Michael Evans investing in vineyard Garrison, Noreen, & Brewer, (2014) was a good decision. Growing a vineyard in an opulent estate where land is expensive was an enormous capital outlay. The property is utilized in investing in a less costly business decision of investing in vineyard plantation rather than real estate that is more capital intensive. Michael Evans opened a cooperative society business. He relinquished vineyard-growing business to other investors. Michael Evans made a wise business decision. Selling and lease back where he charged the new investors a one-off fee of $85,000 and an annual maintenance fee of $3,500 to process one bottle of wine Megan, (2014). Through this, he raised initial capital to fund his cooperative business investment. In conclusion, the cash flows of the new business line are guaranteed. The business may use this annual cash flow to invest in other long-term projects. Michael Evans is a realized the importance of the net present value of the assets and utilized opportunity to invest in a new business

What is counselling and what are counselling skills, how do they Essay

What is counselling and what are counselling skills, how do they relate to other approaches to helping - Essay Example Counseling is often carried out personally in non-public sessions between the counselor and clients. However, counseling can also be performed via telephone, writings and e-mail or video conferencing. It may take many different forms to bring an individual to a better understanding of himself and others. Thus, counseling can be advantageous to a person facing problems in maintaining relationships (What is counseling? N.d.). Counselors require talent for understanding the conditions of the clients and their problems (Nelson-Jones, 2005).In this paper I intend to discuss the different approaches of counseling incorporating the ethical framework, the principles of Rogerian Person Centred Approach, personal growth and therapeutic change. Humanistic approach to psychology was founded by Carl Rogers and Abraham Maslow in the U.S. during 1950s. Humanistic psychology focuses on the subjects that are meaningful to human beings. Humanistic psychologists lay emphasis on conscious experience rather than on behaviour or personal responsibility. That is why they differ from most of the psychologists. Humanistic psychology also focuses on the importance of the individual’s attempt towards personal growth and achievement (Humanistic Psychology: Maslow, n.d). Humanist approach of psychology interprets an individual in regard to subjective analysis of previous experience. It assumes we have a deep-rooted biological drive that inspires us towards personal development and the active psychological condition of self-actualization. It provides stress on the importance of ‘self’ and how self influences an individuals thoughts, feelings, and behaviour. The self is our personality. Rogers extended Maslow’s hypo thesis of self-actualization into the field of humanistic person-centred psychoanalysis with his emphasis on understanding, actual positive regard and authenticity. Building these conditions for development in therapy enables an environment that helps

Conservation tasks used by Piaget, James Mc Garrigle and Margaret Essay

Conservation tasks used by Piaget, James Mc Garrigle and Margaret Donaldson - Essay Example The results suggest that whether children conserve or not does not depend on either of the two tasks used but rather on their mastery of identity. This study aims at exploring Piaget's Task on conservation in children and critically evaluating it in the light of the more recent procedure described by (McGarrigle and Donaldson, 1975). Conservation is defined as the realization that number of items, measure or length is not related to arrangement or look of the objects or items. An examle is when a child is presented with a glass full of water, will they be able to deduct that if that same water is transferred to a broader but plumper cup, then will it conserve the quantity and be the same Piaget argues that during the early childhood stage (below 6 years), children's ability to perform logical mental operations is inadequate. In his research, Piaget identified four stages in cognitive development namely; Sensorimotor stage (Infancy), Pre-operational stage(2-7 years), Concrete operational stage (7-11 years) and Formal operational stage (Adolescence through adulthood). ... Children in pre operational stage fail the the test of conservation because their thinking process does not comprehend the three principles of reversibility, compensation and identity. This has been interpreted to mean that before certain ages children are not able to perceive things in certain ways. The theories have found wide usage especially in developing school curricula, however other psychologists have disagreed with them. They have argued that conservation tasks do not necessarily reveal an essential limitation in the child's appreciation of quantity. Below are some of the arguments as to why children may fail to conserve: That the subjects may be distracted by the procedure. They may think that the experimenter wants them to answer in a certain way especially if the question is repeated. That the child may forget if the experimenter interfered with the information stored in Short Term Memory. Porpodas (1987). The children may not understand the relational terms. That the conservation task being artificial would normally make no sense to a child. Lenz (2003) argues that Piaget does not take into account matters of simplicity or complexity of the task and that if a task is simple enough the child may perform correctly but if complex, even an older child may make pre-operational mistakes. Indeed, in an effort to illustrate that children younger than in Piaget's typical age can conserve, many researchers have modified Piaget's original procedure. For instance McGarrigle and Donaldson (1975) assert that if the transformation is bought about accidentally then the number of 5-6 year olds conserving will go up. This study is to

Is International Trade Driven By Theory Essay Example | Topics and Well Written Essays - 1750 words

Is International Trade Driven By Theory - Essay Example Events happen all around us at all times. Life is full of something either happening or not happening. Science makes an attempt to codify the related events and find reasons for events that happen regularly and develops what we understand a theory that describes and informs us of why these events happen or not happens. Kaplan (1964) and Merton (1967) state that theory is the answer to the questions of why. The study of the substance of causal relationships, identification of sequence and the schedules of events are highlighted by the theory which tries to portray systematic reasoning for both occurrences and non-occurrences. A theory is considered as strong when the essential and basic practice or progression is evident and collated. A theory is considered weak if these factors are missing. A theory will essentially be an explanation, a delight and a prediction of events (Weick 1995). This means that there will be the presence of logic, it will calculate, foretell and it will satisfy the curiosity even f it is contrary to expectations. A theory is also multi-directional. It may delve in itself to find deeper or finer meanings or it move in an upward or sideways direction to be a part of another concept. It is not so easy to define a theory, despite the above attempt, but it is easier to state precisely what a theory is not. Sutton and Staw, through the ASQ forum, have very aptly explained that a theory is definitely not references and data. These provide inputs but add no substance or value to the phenomena.

An Research about Relationship among Fashion Life Style Dissertation

An Research about Relationship among Fashion Life Style - Dissertation Example The paper "An Research about Relationship among Fashion Life Style" examines consumer psychology. The Chinese economy has grown at a very fast pace in the past decades resulting in a high number of affluent and middle class consumers. With phenomenal growth in the number of affluent households China has now become the third largest consumer market for luxury goods. However, the affluent consumers in China do not necessarily fall under one consumer segment. While different regions within China have consumers with different levels of affluence, the consumption behaviours of these consumers also vary. GEOLIA, founded in 1985, is a ladies’ fashion brand headquartered in China. Their vision is to discover, to live and to share a fashionable and healthy lifestyle with their customers. They offer quality, trendy products at affordable prices and have easily accessible distribution network. Their customers comprise of ladies between mid-twenties to early thirties who are at that phase in their lives when values and lifestyle are cultivated. The brand aims to partner with their customers in grooming their personal styles both in fashion and everyday life. Brand GEOLIA is impressed upon the Chinese consumer’s mind as the friendly women’s apparel brand. A consumer behavior model proposed by Hawkins et al (2004) reflects the effect of self concept and life style on consumer behavior. The self-concept and lifestyle influence the needs and desires; these needs and desires can be satisfied through consumption. Lifestyle involves multiple levels and it is determined by people’s individual characters, past experience and current condition. Lifestyle keeps changing with changes in the internal and external environment. As consumer fashion life style and self concept increases consumer purchase intention becomes more powerful (Ahmad et al., 2010). Consumer Purchase Consumer purchase has become a leisure activity and is used to enhance social status. Th is is based on the concept of the self and a material symbol of who a person is and how he/she would like to be known (Dittmar and Drury, 2000). Clothing and fashion are the medium through which people express their identity (Rathnayake, 2011). Fashion and clothing display how a person would like to, in other words, the person’s self concept. Self-concept Self concept has received considerable importance in marketing literature as it can significantly impact consumers’ decision making and product and brand choices (Ye, Bose and Pelton, 2012). The theory of self-concept suggests that consumers prefer products that are consistent with their self-image and hence the brand or product can enhance their self-image. The self-congruity theory suggests that the self-concept is dynamic and conflicting traits may exist in an individual’s self-concept. Fashion and Fashion Consciousness Fashion has been defined as â€Å"a way of behaving that is temporarily adopted by a dis cernible proportion of members of a social group because that chosen behavior is perceived to be socially appropriate for the time and situation† (Sproles cited in Chen, Shang and Lin, 2008). People like to be perceived as trendy and hence would follow the trend that the group follows. With the inclination to follow the fashion trend they may tend to neglect their own personal feelings and

Utopian literature through the time of World War II Essay

Utopian literature through the time of World War II - Essay Example This research will begin with the definition of utopia, by the very sense of the word, is the fantasy of a non-existent society and it could not have crept into literature as far it did without the help of its pivotal device called ‘science fiction’, which, in the words of Darko Suvin, is characterized by ‘cognitive estrangement’. Understandably, the literature produced through the period of World War II and after was more dystopian in nature than utopian, considering the pessimism generated (by the events in the contemporary world) among intellectuals giving rise to the portrayal of degraded societies as in H. G. Wells’s â€Å"The Time Machineâ€Å". Often, the pessimism manifested in the title itself like Chad Walsh’s From Utopia to Nightmare (1962), â€Å"New Maps of Hellâ€Å" by Kingsley Amis and â€Å"The Future as Nightmare: H. G. Wells and the Anti-Utopiansâ€Å" (1967) by Mark Hillegas. Utopian literature, its suggestive nature n otwithstanding, is interesting only because it reflects mankind’s worst fears at a crucial point in history and not because it contains anything that has the potential to make the world a better place. The dystopian predictions of doom by a host of writers, from John Brunner to Margaret Atwood, never came true. It is worth recalling here, however, that Ray Bradbury’s apprehension (that television would kill books) in his 1953 iconographic work â€Å"Fahrenheit 451â€Å", was not entirely misplaced.... It points out how knowledge can be harmful unless it is combined with wisdom by the example of a scientist who â€Å"studies the composition of atom from a disinterested desire for knowledge and incidentally places it in the hands of powerful lunatics† (Yardi 103). Interestingly, Lost Horizon written by James Hilton in 1933 prophesies a devastating war that engulfs most parts of the world in less than a decade. In the classic, Hilton envisions a utopian civilization with Oriental character in a remote monastery, Shangri-La, in the Himalayas where wonderful people live. The faith of the Shangri-La monks is a combination of the features of Christianity and Buddhism, the motto being ‘everything in moderation’: the rule is moderately strict, only moderate obedience is expected and people are moderately sober, moderately chaste and moderately honest. The book, for most part, is a deep meditation on noble ideas like pacifism and philosophy, instead of being a mere adven ture story. Shangri-La people teach us that exhaustion of passions is the key to the beginning of wisdom and that the most impossible things in life become possible if we believe in them. Nevil Shute’s On the Beach (1957) portrays a massive nuclear war and the resulting radioactive dust marking the end of the world. Another post-apocalyptic masterpiece The Day of the Triffids (1951) by John Wyndham, with its ever-present threat of walking plants and blinding comets, is more like a horror novel than mere science fiction. Without any mention of nuclear warfare, this book still deserves to be labeled apocalyptic for its story is centered on rebuilding the society after a devastating

Dr. Henry Jekyll (and Mr.Hyde) was born in to a society of morality, respectability and religion Essay Example for Free

Dr. Henry Jekyll (and Mr.Hyde) was born in to a society of morality, respectability and religion Essay Dr. Henry Jekyll was born in to a society of morality, respectability and religion. It was believed that progress could only be made if everyone was self-disciplined and moralistic. Authors such as Samuel Smiles wrote Self-Help guides. All this was aimed to help the rich get richer and the poor get poorer. In an age of stern, industrious hypocrites, respect was everything to the upper and middle classes. People denied themselves alcohol, gambling and prostitution to gain the respect of others. Jekyll refers to these denied as pleasures. People lived without these pleasures but soon began to wonder what they were missing. This brought about the slum adventurers. These were middle and upper class men who wanted to keep the respect of their society but, through anonymity, still indulge in the pleasures the poor slums had to offer. They would work by day in their offices and at night would journey down to the alleys of the slums. A person such as Mr Utterson, a London lawyer who does not wish to indulge in pleasures is of a vicarious nature. It is noticed that though he enjoyed the theatre, [he] had not crossed the doors of one in twenty years. It is this vicariousness that helps him solve the case of Dr. Jekyll and Mr Hyde. Utterson is the opposite of Jekyll in the way that Utterson keeps the respectability of the Victorian society, whereas Jekyll rebels. The rebellious nature of Jekyll leads him to discover how to transform his appearance. Dr. Lanyon, a respectable conventional doctor of Victorian society frowns on Jekyll mostly secret work, which he refers to as unscientific balderdash. In the beginning it is difficult for us to feel sympathy for Dr. Jekyll: he is acting by his own conscience. At this current stage, he is in no way addicted to Mr. Hyde. Even the sight of Mr. Hyde pale and dwarfish who gave the impression of deformity but with no nameable malformation, according to Mr. Utterson, who had taken a loathing to my gentleman at first sight, should have forced Jekyll to recognise that Hyde was evil. It is very difficult to feel sympathy for Jekyll after we are told about when Hyde trampled calmly over a young girls body. Normally after this event anyone else would have ceased his transformation into Hyde. But Jekyll starts to become addicted to taking the drugs (as with modern addictions) and continues to turn into Hyde even after trampling the girl. As if trampling the girl was not a big enough deterrent Hyde brutally murders Sir Danvers Carew. Jekyll, knowing what had happened, easily accepts it and shifts the blame to Hyde. He shows this in Dr Jekylls full statement of the case, it was Hyde, after all, and Hyde alone that is guilty. The ease at which he accepts this and shifts the blame could almost be inhuman. But after he discovers that he begins to change into Hyde spontaneously, without the drug we see he is very self centred and selfish, I must have stared upon it half a minuteI rushed to the mirror my blood was something exquisitely thin and icy. Even though Jekyll is selfish about this, not mentioning what a terrible thing that he made now controls. We can feel some sympathy for knowing that he is trapped and at anytime Hyde might emerge over which Jekyll has no control. Alternatively we can have sympathy for a man that failed to have foreseen what would happen and stopped the process as soon as possible. But he continued to satisfy his need for the pleasures which otherwise eluded him. It is also very difficult to feel sorry for someone who knows and remembers what happens, but does not take action to prevent it. My two natures had memory in common. Surely the memories of the girl and Carew should be painful enough to force any sane and humane person to put a stop to Hydes actions. Hyde goes into hiding after Carews murder in fear of being hung, should he be caught. This removes a lot of the sympathy we may otherwise feel towards Jekyll at this point, as yet again he shows signs of being selfish and putting himself before everyone else. Some of this sympathy is regained when he is in hiding, he begins to show genuine remorse for Carews death. In the statement of the case, Jekyll finally admits to Hydes evil by saying It was no longer the fear of the gallows, it was the horror of being Hyde that racked me. This shows that Jekyll has become altruistic. Jekyll has now begun to put himself after everyone. He now excepts the he must not let Hyde free again for fear of him committing more evil. It is now we finally begin to feel sympathy and start to respect Jekyll for trying to put a stop to Hyde. Finally Jekyll commits suicide to save the world from the terror and evil Hyde could unleash. This gains him the greatest respect and sympathy. He took his life to save others from the extreme evil he had inadvertently created. He finally takes ultimate responsibility and puts a stop to Hyde. In conclusion I think that Jekyll was a victim of Victorian society where respect was everything. In some parts it is hard to offer our sympathy but his final act was one that one must respect and offer sympathy for the pain Jekyll went through. As we have seen restricting things from people can only bring out the bad side of them, as Jekyll explains, My devil had been long caged, he came out roaring. Personal freedom is one of our greatest assets and one we take very much for granted.

Beneath - Original writing Essay Example for Free

Beneath Original writing Essay Psychoanalysis begins. Monday morning, it was a big rush. I had to pack the kids lunches and watch after them as they left for school. It was Kellys first day at junior school, and Michelles at secondary school. I dont know why, but as I shut the front door I had flash backs of my first day at secondary school. I got worried. Michelle is a lot like me when I was her age. To my children, I am a normal nice mother, ordinary like everyone elses mother. That is how they see me. They know nothing about my past It was an excruciatingly hot and sunny day July 30th 1993. I dreaded the moment the sunrise began. I felt a huge lump at the back of my throat, my head was pounding, and droplets of cold sweat trickled down my forehead. I used to be a normal, quiet, and well behaved person but, all that changed when I met Camryn Barnes. After the first three times, I promised myself I would never do it again. Yet here I was with the hammer in my hand smashing the new lock on the school gate. It fell to the ground making a loud sudden noise, which made me jump even though it was expected. I ran towards the school building, but the school doors were all locked up. After approximately an hour of struggling through one of the technology department windows, I managed to squeeze in. I ran to Dr Daniels office, pushing the door open. There, looking up at me with his beady black eyes was Cuddles Dr Daniels hamster. I had my equipment ready and then I opened the cage door picking up the small rodent with my trembling hands. I whispered to him in the darkness, Dont worry, itll only take a second. I reached into the back of my threadbare jeans pockets and pulled out the razor sharp penknife. Tears poured down my face. One, Two, Three. I did it. My hand was drenched in fresh, warm blood. I dropped Cuddles on the floor and retreated back to the technology department. I can still remember the cold beady eyed stare Cuddles had given me as I pulled the pocket knife out of him. I recollect a similar expression from the past victims. I got back to Camryn a lot quicker this time. Camryn was pacing outside and when she saw me she signalled to me to hurry up. I half jogged and half ran. When I reached her, she caught hold of my wrist and pulled me along with her. I glanced at her beautiful tanned face and saw the contented smile displayed along her lips. I could almost hear her heartbeat, and taste her idea of sweet satisfaction. When we reached her house, she dragged me to her bedroom then leapt onto her red crumpled bed and kicked off her scuffed trainers. Did you do it? Did you top the pint sized rat? she asked with enthusiasm. There was a malicious gleam in her green eyes. I nodded staring at my sweaty bloodstained hands. There was a huge lump in the back of my throat, my stomach churned. I couldnt take it any more, You said wed never do it again! Wasnt killing Jackies budgie, Peters cat and Ellies turtle enough? Why Dr Daniels hamster? Why? Camryn stood up with a frown creasing up near her finely plucked eyebrows. Whats wrong with you? Dr Daniels failed me in English! I worked so hard for him! He got what he deserved! A sudden anger flushed through my body, Like the others got what they deserved?! Looking at Camryn, and seeing her satisfied realization from her manipulation, I had to leave. I walked home, showered and then lay in bed. I remember glancing at my digital clock it read 6:16am. I tried so hard, but failed to fall asleep. It was only a few hours, but seemed like days passing by. Eventually my mother came into my room to see why I was not ready for school. I dont feel well, I murmured. Mother carelessly shook her head and left me alone. A month ago I used to be really close to my mother, but now I just seem to want to push her away and out of my life. It was almost as if I surrendered everything I loved for Camryn. My mother, my old friends and, my self respect. Eventually I fell asleep. Beneath my closed eyes, my thoughts swivelled in front of my eyes. All I saw was beautiful, cold water, ripples glistening. That was where I wanted to be. I woke up and changed into my favourite clothes. I knew what I was doing. I felt dizzy but ignored the queasy feeling. I sat on the floor and scribbled a note for my mother. I used to write little poems to my mother ages ago. I knew that was what I had to do now. I still remember what I wrote in the poem, word for word. June year 1993, on the 25th day, The day I changed, stopped to pray, I made promises, made to break, But itll be over, whilst I lie in this lake, I feel like Im, spiralling into a deep dark hole, Hopefully this depth, can contain my soul, What Im trying to say, dear mother, Im Sorry, For pretending to be so upbeat and jolly, Sorry mum, I didnt mean to, Ill be thinking of you through and through.