Demutualization of Indian stock exchanges is much talked and less implemented. This article focuses on the merits and demerits of the related issues taking clues from global stock markets resorting to demutualization.

Indian stock exchanges have been working on mutual association of brokers and interested parties who have stake in the exchanges. Since the establishment of the Bombay Stock Exchange (BSE) in 1875 as "The Native Share and Stock Brokers Association," it has been working on mutual association of brokers. Usually they have been acting as decision makers and stakeholders of the exchanges. They have been taking care of the day-to-day activities of the exchanges and also trading on them. As these members have both ownership and decision-making power, they try to control the trading activity of the exchanges. That creates conflicts in the interest of the other stakeholders such as retail investors, as the brokers are looking after the interest of their own which may sometimes be against the interest of the investors. We have seen a number of stock scams in the past, because of this conflict of interest.

In his budget speech for the year 2002-2003, the Finance Minister has emphasized upon the view of demutualization of stock exchanges within one year. Feeling the need of the hour Sebi appointed a group of eminent personalities who have expertise in different fields such as accountancy, taxation, law and company law affairs to advise on how to implement the announcement of the Finance Minister.

Portfolio Organizer Magazine, Indian Stock Exchanges, Global Stock Markets, Decision-Making Process, Demutualization, Corporatization, Merger and Acquisitions, Post-Demutualization, Bombay Stock Exchange, BSE, National Stock Exchange, NSE, Mutual Exchanges, Business Corporations.