This chapter explores stock exchanges, which are the most visible and vocal among capital market institutions. Despite the waves of demutualization and consolidation, exchanges remain idiosyncratic institutions. Even where similar structural reorganizations have occurred, the underlying factors prompting such moves, and potentially the on-going operations of the exchanges, are often quite different. As capital markets grew in importance, the role of exchanges extended beyond that of a trading venue. The modern exchange also serves political masters, acting as a national symbol in some cases, and thus eliciting regulatory responses not based on market considerations alone. More importantly, exchanges are imbued, implicitly or explicitly, with a ‘public interest’ due to their impact on the related issues of economic growth, systemic financial stability, and investor protection. The chapter then considers high frequency trading, which drove institutional investors off the exchanges and into the ‘dark pools’, creating concerns over exchange liquidity, transparency, and price-discovery.
Firm-level access to international capital markets: evidence from Chilean equities