Learning Contract template Essay

We have provided this template to help you to build up and structure your learning contract. You will find an introduction to the learning contract in Activity 1.6 of the Study Guide and you will find detailed guidance in the Learning Contract Guidance. This will have been sent to you as a printed booklet and is also available on the Study Resources section of the Module web-site. For each of the five sections of this template there is a corresponding section in the Learning Contract Guidance (from page 10 onwards). You should work through and make notes on each section of the Learning Contract Guidance, to help you to develop your ideas, before you start to complete the relevant section of this template. We suggest you keep your initial notes and reflections on the activities in these sections of the Learning Contract Guidance in your Learning Journal; these will help you to develop your thinking about your learning contract and to decide what you want to write in each section. You can, of course, change the text you have written in this template document as often as you like. This is an important point because you are likely to find that your thinking changes as you work through the activities in the Learning Contract Guidance and that you will want to revise the content several times. For this reason, we suggest you to start drafting your learning contract well before week 10 when you will submit it as eTMA02. You may of course prefer not to use this template or to use it as a starting point and then to amend it – and this is fine. You are not confined to using exactly the structure we have suggested here, as long as you clearly cover each of the five elements. If you do use this template, you will find indicative word limits in each section which will help to give you a sense of how much you need to write – but you are free to alter these as long as you remain within the overall limit set out for eTma02 (1,600 words) . You will, of course, need to delete the instructions which are given in italics in each section before you submit it. This will leave you with the headings (in bold) and your own content. Template Section 1: Possible Learning Topics Read pages 10- 13 of the Learning Contract Guidance from the heading Section 1: Possible Learning Topics to the end of the section headed Pulling together your thoughts about Section 1. Make notes in your Learning Journal of your thoughts about the questions and illustrative cases in this section. When you are ready write here your thoughts about the topics you would like to study to make improvements in your performance at work. You will study these in the work-based learning inquiries which you will carry out from week 11 of this module. Remember that you are strongly advised to make one of your topics time management and to choose at least one of your topics from those covered in the Topic Guides (you will find further guidance on this in Activity 1.6 of the Study Guide). If you are a BUXS130 student one of your topics must be Customer care in the public sector. You should have two topics plus one reserve (in case either of the first two proves too difficult to study in practice). Explain briefly why you want to learn about these topics and why you want to make the changes to your working practices that you have identified. Suggested word count: approximately 200 words Section 2: You and Your Learning Context: Read pages 13-17 of the Learning Contract Guidance from the heading Section 2: You and Your Learning Context to the end of the section headed Pulling together your thoughts about Section 2. Make notes in your Learning Journal of your thoughts about the questions and illustrative cases in this section. When you are ready, use the notes you have made to write a short summary of how your learning experiences and work environment have influenced the choice of topics which you identified for your work-based learning inquiries in Section 1, and the way you will learn about each of them. Remember that your learning context includes your work environment and you will need to bear in mind how much freedom you will have to make changes to the way you carry out your work, as this will obviously influence the way you will be able to manage your learning. Suggested word count: approximately 200 words Section 3: Your Learning Objectives: Read pages 18-21 of the Learning Contract Guidance from the heading Section 3: Your Learning Objectives to the end of the section headed Pulling together your thoughts about Section 3. Make notes in your Learning Journal of your thoughts about the questions and activities in this section. When you are ready, use the notes you have made to help you to draw up one learning objective for each topic area that you identified for your work-based learning inquiries in Section 1 above. Remember to try to make each objective SMART (Specific, Measurable, Aspirational, Realistic, and Timely/Time-bound) as explained on pages 18-19 of the Learning Contract Guidance. You should also explain briefly why you have chosen each objective – this includes why you think the learning in each objective is important and how your work practice might be improved as a result. Remember to include your reserve objective (although you can comment on this more briefly than the other objectives). If you are a BUXS130 student, remember that one of your objectives must relate to Customer care in the public sector. Suggested word count: approximately 350 words Section 4: Learning Strategy and Resources: Read pages 21 -30 of the Learning Contract Guidance from the heading Section 4: Learning Strategy and Resources to the end of the section headed Pulling together your thoughts about Section 4. Make notes in your Learning Journal of your thoughts about the questions activities and illustrative cases in this section. When you are ready, use the notes you have made to help you to develop a plan for each of your learning objectives (again, you can do this more briefly for your reserve objective than for the first two). For each objective you should show: what steps you will take to carry out your work-based learning inquiry. This should include a plan of action which shows what you will be doing in each week from week 12 of this module. You may find it helpful to include some interim targets and/or a ‘table’ format to outline your strategy. an overview of the resources which are available to you and which you expect to use in carrying out your work-based learning inquiry. These might include Topic Guides, other online or printed articles and books, your mentor, your line managers and your colleagues. You should indicate your reasoning in selecting these resources and how you will choose, access, and make use of them. Where you identify people as a resource you should say what specific help will you seek from each of them, Suggested word count: approximately 500 words Section 5: Demonstrating Your Learning: Read pages 30 -40 of the Learning Contract Guidance from the heading Section 5: Demonstrating your learning to the end of the section headed Pulling together your thoughts about Section 5. Make notes of your thoughts about the questions, activities and illustrative case in this section in your Learning Journal. When you are ready, use the notes you have made to help you to explain how you will demonstrate your learning in relation to the objective you have decided on for each of your work-based learning inquiries. In each case you should explain: how you will show what you have learned about the topic which is the focus of your work-based learning inquiry (and which you identified in section 1 of your learning contract). how you will know whether you have achieved the objective you set for each work-based learning inquiry (and which you identified in section 3 of your learning contract). You should be able to identify measurable evidence or indicators for each objective. You should also be able to identify sources of evidence which will indicate that you are making progress at interim stages as well as evidence of achievement at the end of your work-based learning inquiry. As in previous section you should deal only briefly with your third objective. Suggested word count: approximately 350 words

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

Australian Surging Housing Prices

The surging housing prices in Australia is spearheaded by the acceleration in the Sydney Australian, the largest as well as the most expensive market. As reflected in the most recent Home Value Index by CoreLogic RP Data, the capital city has its housing prices surging by 1.6 percent in May. This shot in housing prices left the rise over the first five months of the year at five percent (Draper 2000). The medium dwelling price in Australia across the nation pegs at $580,000. The trend has shown no slowdown but has rather bucked the anticipation from the various parties early in the year that prices of houses were due to deteriorating. The surging price is a clear manifestation of the high rise construction booms beginning to influence the values of the apartments (Karantonis and Janet Ge 2007). A greater proportion of the price surging evolved from free prices that lurched 1.8 percent thereby overwhelming a smaller 0.1 percent rise in units. The strong 3.1 percent growth in Sydney that accounted for the gains witnessed in May that took median dwelling price to $782,000. The past quarter saw the prices in Sydney jumping by a record 6.6 percent leaving the gain over the previous year at 13.1 percent. The prices of housing outside Sydney in all capital except Perth recorded gains of between 0.1- and 2.5 percent (Duca, Muellbauer and Murphy 2010). Despite being far below the pace witnessed in Sydney over the same period, there was a thirteen percent price surging by May 2015, and this was the fasted annual pace across Australia. The price leaped by 0.1 percent in Brisbane while it shot 0.7 percent in Darwin. In Canberra and Hobart, the surging were 2.2 percent and 2.5 percent in that order. Perth which is the most exposed capital to the mining sector fortunes and it went on record as the single capital to have recorded a decrease in the prices of the housing of 2.7 percent. Since May 2012, Australian Housing prices have increased by 36.6 percent with Sydney recording a surging of 57.5%, the steepest rise over the period (Rahman 2008). The record in Sydney showed that it outpaced gains of 18.5% and 39.4% for Brisbane and Melbourne respectively that took third and second spots.  Ã‚   From the above table, the monthly, annual, as well as quarterly changes in the prices of house crossways Australia's capital besides the current median value per city, have been revealed. It has been suggested by Lawless, the leader of research at CoreLogic that a rise in investor operations ahead of the federal election probably accounted or hastening in property prices in Sydney in May. It has been noted that the degree to which the investors fuel the recent outpouring in Sydney home value is challenging to quantify (Rahman 2008). Nevertheless, the data from housing finance to March demonstrated that investors have been trending upward since hitting the latest trough in November 2015 at 42.9 percent as a proportion of the whole new mortgage mitments. Data drawn from March indicates that investors currently entail 47.6 percent of the whole new mortgage obligations that is the highest proportional reading since August 2015 (Rahman 2008).  Ã‚  Ã‚  Ã‚   Other factors that have led to surging prices include short-term factors (interest rates, investment demand, and economic climate) institutional factors (financial deregulation as well as innovation, land supply as well as land-use planning system and government taxes, levies as well as charges). Long term factors include demography, wealth effects and economic growth. The Australian government can embrace various macroeconomic factors to guarantee housing affordability to the young generation. It has been shown that government taxes, charges, and levies account for the surges in housing prices (Rahman 2008). The government imposes taxes, levies a well as charges at all levels in Australia on the urban land development and development. Investors, therefore, face such costs as developer levies, stamp duty on both transfer and sale of land as well as land tax alongside GST on new house construction as well as renovation of the existing houses. The government can subsidize the housing sectors through reduction of these costs to ensure that developers do pass these burden to the eventual housing prices. This will reduce the ‘total indirect task take’ which is noted to be above $124,000 in Sydney and over $88,000 in Melbourne. Without this, this cost will add up to a remarkable ponent of prices of house and hence the lack of affordability of the housing for the young generation (Rahman 2008). Both land prices and affordability correlate with the price of land that is determined by the developed urban land supply. The supply of residential land is influenced by the cost of development, the land development industry structure, and rules as well as the effectiveness of the land-use planning system (Ge and Williams 2015). The government has the power to control land uses which impact on both availability of developed land as well as the related cost of such lands. Since it takes quite some time to bring the underdeveloped land into mercial use besides the lags cost by government regulation on land use which decreases the short-term responsiveness of land supply to immediate land demand pressure, there is a need for the government to waive or reduce the lag (Draper 2000). Reducing this land would mean that the inelastic short-term price of supply is eliminated. Accordingly, since it the short-term price inelasticity of supply is an accelerator of price surging, its removal wil l result in affordable housing prices for the young generation (Oster and Miller 2005).    The government can also respond to increase in housing prices through interest manipulations. This is because for a given level of price, the rates of interest means reduced mortgages repayments. With a reduction in repayment, developers have increased the opportunity of borrowing at any repayment to- i e ratio. The effect of this would be a rise in the demand, and hence housing prices increase ceteris paribus. Conversely, a surged rate of interest will ease the demand (Bourassa, Hendershott and Murphy 2001). The effect would be either stagnating prices, a moderate rise in price or declining prices depending on the aggregated influence of other factors. The government should control the prices of the housing by ensuring a high but stable interest rate so as to eliminate the influence that nominal mortgage rate of interest has on real house price surging both in the short- and long-term. This action will try to weaken the lasting effect that lower rates of interest have had on prices rise in the previous years that are still being felt to date through hiked housing price in the country (Bourassa and Hendershott 2005). The government can also make sure that housing is affordable by controlling the wealth effect. Every society perceives housing as a central store of wealth. It is acknowledged that gross housing assets account for over 50% of the total personal wealth in Australia. Owner occupier, as well as landlord-investors, have a feeling of wealth when the prices of the existing houses are hiking (wealth effect) resulting in a rise in consumption spending (Bewley, Dvornak and Livera 2004). Accordingly, the aggregate demand and hence economic growth results in support of the increasing prices of the house via a self-reinforcing cycle. The current surging in prices have resulted from this and hence the government must not allow this to continue into the future. The government should curb the wealth effect by ensuring that prices of the existing housing do not shoot (Badcock 2009). The government needs to make sure that cases of decreased supply of affordable private rental housing, dwindling suppl y of social housing as well as prolonged time consumed to release new land are eliminated since all these are an essential recipe for lurching house prices in Australia. The stamp duty concession, grant and cash assistance to the occupants by Federal Government First Home Owners are only but costly failures as they have perpetuated increase in expensive houses (Badcock 2004). These policies have failed as they only work on the ‘demand side’ of the housing market with no precise and significant rise in the supply of affordable housing. The government must focus on affordability policies that tend to increase housing supply especially low-cost housing. Reduction of the duration taken to bring land and housing to market must receive particular attention henceforth. The desirable land supply a panied by proper transport facilities and infrastructure alongside the affordable rental housing supply has to be enhanced. The government must give support to the marginal purchasers via appropriate assistance to dwell in their homes (Ahearne et al. 2005). The government needs to develop a national affordable housing strategy that will be helpful in the reduction of housing stress alongside housing crises in Australia.   Ahearne, A.G., Ammer, J., Doyle, B.M., Kole, L.S. and Martin, R.F., 2005. House prices and monetary policy: A cross-country study. International finance discussion papers, 841. Badcock, B., 2004. ‘Snakes or Ladders?’: The Housing Market and Wealth Distribution in Australia. International Journal of Urban and Regional Research, 18(4), pp.609-627. Badcock, B., 2009. An Australian view of the rent gap hypothesis. Annals of the Association of American Geographers, 79(1), pp.125-145. Bewley, R., Dvornak, N. and Livera, V., 2004. House price spirals: Where the buck starts. mSec, monwealth Bank, Sydney. Bourassa, S.C. and Hendershott, P.H., 2005. Australian capital city real house prices, 1979–1993. Australian Economic Review, 28(3), pp.16-26. Bourassa, S.C., Hendershott, P.H. and Murphy, J., 2001. Further evidence on the existence of housing market bubbles. Journal of Property Research, 18(1), pp.1-19. Draper, D.A.G., 2000. Rent control and the efficiency of the housing market. Duca, J.V., Muellbauer, J. and Murphy, A., 2010. Housing markets and the financial crisis of 2007–2009: lessons for the future. Journal of Financial Stability, 6(4), pp.203-217. Ge, X.J. and Williams, B., 2015. House Price Determinants in Sydney (No. eres2015-230). European Real Estate Society (ERES). Karantonis, A. and Janet Ge, X., 2007. An empirical study of the determinants of Sydney’s dwelling price. Pacific Rim Property Research Journal, 13(4), pp.493-509. Oster, A. and Miller, P.W., 2005. House Prices-Drivers and Links to the Broader Economy: Rational or Irrational Exuberance. [Department of] Economics, University of Western Australia. Rahman, M.M., 2008. Australian housing market: causes and effects of rising price. In Proceedings of the 37th Australian Conference of Economists (ACE 2008). Economic Society of Australia (Queensland).  

To Be or Not To Be Free Essay Example | Topics and Well Written Essays - 1000 words

To Be or Not To Be Free - Essay Example However, one must question themselves and rephrase this interrogation once again: What kind of a world would we be living in if we did not keep a check on or misuse the Right to Freedom of Speech and Expression? Therefore, with reference to this, there have been certain changes made in the European Union Charter with regard to Property laws as well. According to Article 17 of the EU, â€Å"No one may use the rights guaranteed by the Convention to seek the abolition or limitation of rights guaranteed in the Convention. This addresses instances where states seek to restrict a human right in the name of another human right, or where individuals rely on a human right to undermine other human rights (for example, where an individual issues a death threat).† Taking a look at the use of property that comes under it, it has been also stated in the EU that: 1. Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law insofar as is necessary for the general interest. 2. Intellectual property shall be protected. Therefore, according to this, it is clear that even though a person might have Rights regarding Speech and expression, he or she is not permitted by law to use those rights to undermine the rights of another person.

Analysing operational risk failure of Barings bank Essay

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The History of Tattoos in the USA Research Paper

The History of Tattoos in the USA - Research Paper Example â€Å"In the Jesuit Relations of 1663, it was reported that an Iroquois chief known to the French as "Nero" bore on this thighs 60 tattooed characters, each of which symbolized an enemy killed with his own hand†. Captain James Cook made a voyage to Tahitia in 1769 where he noticed that the local people were skilled in making their skins. The indigenous people printed symbols on their bodies and tattooing was established as a field of art. The American sailors in the early nineteenth century played a fundamental role in the evolvement of tattooing in the USA. In the ancient America, tattoos were associated with the sailors that used to learn the art of tattooing from their seagoing brethren of the British origin. Sailors in the past used to have faith in the power of tattoos. Sailors would carve their skin to display patterns that they believed had the power to protect them on their sea voyages, â€Å"pay homage to sailing traditions and the fraternity of seafarers, memorializ e loved ones, and showcase mementos of significant experiences and exotic locales† (â€Å"Skin and bones†). Pricking was the term used for the log of the seamen. People began to open their shops near the ports of the ships in order to provide the sailors with access to the tattoos. The designs of tattoos were inspired by the sea-life. There were tattoos of mermaids, anchors and numerous other objects like crosses and hearts. Sailor Jerry Collins is placed amongst the pioneers of the traditional tattooing practice in the USA. He wanted to bring a revolution in the Western style. According to him, the indigenous

Final Assignment Example | Topics and Well Written Essays - 2000 words

Final - Assignment Example For instance, the law of the society may just forbid people form lying, but in some cases, for example in a case where one has to lie so as to save his life or the life of other people, the general law of the society forbidding lying may not provide direction of action. For this reason, therefore, people have different moral systems that give them in resolving moral dilemmas. My ethical system is the consequentialist moral system. The consequentialist ethical system is a teleological theory of ethics meaning that the morality of an action is determined by the consequence or the result of an action, i.e. an action is regarded morally right if it yields a desirable effect or consequence; on the other hand, an action is regarded morally wrong if it results in an effect or consequence that is not desirable. This essay will examine the consequentialist ethical system and how the ethical system influences my opinions of morality and ethics. The paper also will give a review of two articles on two ethical issues associated with my future career. Also, the paper gives two examples of concrete ethical dilemmas that I am likely to face in my career and explains how I would resolve the moral dilemmas. The consequentialist theory of ethics is also called the Utilitarian theory of Ethics. As we have just said, the end result of an action is the determinant of the morality of an action in the utilitarian theory of ethics. What this means in essence is that the utilitarian moral theorists do not take into account the motive of the doer of an action or the means used to do an action in determining the morality of action. The utilitarian theory of ethics holds the view that that consequence or the result of an action can justify the means used to do an action (Pollock, 2012). For the utilitarian moral theorist, therefore, it is morally right to use a bad mean so as to acquire a good result. There are two types of utilitarian ethics, act utilitarian and rule utilitarian. According

An author thesis paper on 4 of J.D Salingers works Term

An author thesis on 4 of J.D Salingers works - Term Paper Example This paper will, therefore, attempt to connect Salinger’s portrayal of children’s innocence based on the four works as named above. We will do a book-by book analysis of his depiction of children to come to a common conclusion... 2.0. Discussion. 2.1. The Catcher in the Rye. This novel was originally written for the adult audience. The book’s adolescent themes such as teenage alienation, confusion, angst, and rebellion however, found more favour among the youth, turning it into a teenage novel. The novel begins with Holden’s narration of events in the past at his school. Through the narration, we see Holden as a victim of circumstances when he loses his school’s football team equipment in the subway prior to the football match that afternoon leading to subsequent cancellation of the match. As a result, he is suspended from school until after Christmas (Crawford 26). Although Holden escaped from school to the Edmont hotel in New York, it is in a bid to get away from conflict and confrontation with his school mates as he engages in a fight with his roommate Stradlater. Later, Holden develops sexual desires and ends up with a prostitute in his room. This is quite innocent and coming of Holden who is in his adolescence, full of desire for sexual exploration. When he brings the prostitute to his room, he does not judge her as harsh as society does as to him, she is just a normal human being who deserves right treatment and respect. Even when she leaves without him having slept with her, he still pays him and thanks her for coming. This shows the innocence of a boy just caught up in the developments of life. Holden engages in drink after his friend, Sally, refuses to elope with him. This he does out of pure frustrations as his sexuality is at peak, but does not wish to enjoy it with anyone but that whom he loves, which is Sally. When he rejects his innocent desire to have her all alone to himself, he has no one to talk to and the on ly way he can deal with the frustration is by drinking it down. His frustrations force him into his parent’s house to see and talk to his sister, Phoebe. The two talk and Holden shares his innocently misinterpreted wish to be a catcher of children in the rye to help prevent them from losing their innocence (Crawford 43). While at Mr. Antolini’s house, Holden is disgusted at what he thinks is a homosexual move by the host toward him. This shows that despite Holden’s sexuality at peak, he regards some things such as homosexuality as immoral and that it should not be tolerated when he leaves Antolini’s house immediately. His allusions toward the end of the novel about being mentally ill and living in a mental hospital shows an innocent childish wish to stay away from the realities of life by staying secluded in a place of no reality. As was his dream to save the children in the rye from the harshness of life, so does he wish to forever stay in the innocence of childhood. 2.2. Franny and Zooey. Franny and Zooey are brother and sister, the youngest members of the glass family. Zooey is a genius while Franny

Love, Death and Fascist Iconography Essay Example for Free

Love, Death and Fascist Iconography Essay To the fascist artist, his or her own art is merely a vessel that encapsulates his or her own socially-motivated beliefs. The works of Yukio Mishima and Leni Riefenstahl, for instance, embody the essence of their individual nationalities at the height of their individual careers—nationalities that might transcend origin and geography, yet extol   culture, tradition, ritual and society.   Mishima and Riefenstahl exhibit incredible parallelism in their works. Mishima, in his short story Patriotism, describe the human form with such detail and meticulousness reminiscent of Riefenstahl’s style in her 1930’s films. Much like Riefenstahl’s The Last of the Nuba, the naked body is depicted as a means of fascist iconography—the body, perfect and pure in its own way, merges with a bigger community of bodies of like characteristics (Evans 31). Susan Sontag’s treatise on the works of Riefenstahl, Fascinating Fascism, breaks down the latter’s appreciation and fascination of the strong and beautiful Nuba figure as examples of Nazi ideology corresponding to the idea of aesthetics for fascists. Sontag writes, â€Å"Riefenstahl’s portrait of them evokes some of the larger themes of Nazi ideology: the contrast between the clean and the impure, the incorruptible and the defiled, the physical and the mental, the joyful and the critical (par. 27).† This description is echoed in Mishima’s Patriotism, when the lead character Takeyama decides to commit seppuku—ritual suicide by disembowelment—as an act of redemption from the dishonor incurred when his comrades formed alliances with the mutineers.   Mishima’s imagery of Takeyama and his wife Reiko’s preparations for the ritual, as well as the metaphors he uses in describing the couple’s physical forms conveys a fascination for perfection and beauty a la Riefenstahl—remarkable symbols of fascist iconography, as Sontag would consider. In its own effect, Takeyama, Reiko and the Nuba become examples of the â€Å"master race†, where everyone is beautiful, strong, and does not age (Trimborn McCown 256). Mishima and Riefenstahl’s works are also parallel in such that their depictions of death are detailed, beautiful and almost enthralling.     In Patriotism, death in is portrayed as a reward, a happy and celebrated ceremony that requires the utmost preparation. In the Nuba culture, death is a central event, along with fighting. In the Japanese culture, as evidenced by Mishima’s paramount detail in describing Takeyama’s death, death is a way for one to demonstrate his or her enduring loyalty and nationalism to the Imperial system. Death in both Mishima and Riefenstahl’s works surpass life’s merriest events—birth, marriage, love—at times besting even life itself. Mishima writes, â€Å"All around, vastly and untidily, stretched the country for which he grieved. He was to give his life for it. But would that great country, which he was prepared to remonstrate to the extent of destroying himself take the slightest heed of his death? He did not know; and not matter (par. 63).† Takeyama’s examination of self not only mirrors the authors suggestions of his own death wish, it also echoes the sentiments of those under the spell of a fascist ideology—their so-called patriotism—that converts their idea of nationhood as something not only territorial, but equally and incredibly spiritual. The young lieutenant and his bride chose their own death by seppuku, which may be seen as either an honorable and extremely devout approach, or as a self-destructive and deadly consequence of their fanaticism. Mishima unintentionally diverts the reader’s attention from this concept with his alluring illustrations of fascist ideals and concepts, again reminiscent of Riefenstahl’s imagery in her Nazi films. Sontag would consider it an absolute expression of fascist art, in the sense that it â€Å"glorifies surrender, exalts mindlessness, and glamorizes death (par. 36).† Above everything, Mishima verifies in his work and own life the burden that comes with the duty to abide by cultural tradition—duty can be all in one beautiful or ugly, life or death. Works Cited Evans, Mark. Movement Training for the Modern Actor. London, UK: Taylor and Francis,   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   2008. Mishima, Yushio. â€Å"Patriotism.† Trans. Geoffrey W. Sargent. Mutantfrog Travelogue. 27   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   June 2009. http://www.mutantfrog.com/patriotism-by-yukio-mishima/ Sontag, Susan. â€Å"Fascinating Fascism. â€Å" University of California Santa Barbara. 27 June 2009.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   http://www.history.ucsb.edu/faculty/marcuse/classes/33d/33dTexts/SontagFascinFas  Ã‚  Ã‚   cism75.htm Trimborn, Jurgen McCown, Edna. Leni Riefenstahl: A Life. New York: MacMillan, 2007.