Explain briefly the demutualisation of stock exchanges.

Demutualisation means segregation of membership rights in a recognized stock exchange into a distinct ownership right through the ownership right of shares and distinct trading and/or clearing right of that recognized stock exchange. In simpler terms it is a process by which a mutually owned stock exchange is converted into a company owned by the shareholders through transforming its legal structure into a business entity. The purpose of demutualisation is as follows: Stock exchanges owned by members tend to work towards the interest of members alone, which could on occasion be detrimental to rights of other stakeholders. Division of ownership between members and outsiders can lead to a balanced approach, remove conflicts of interest, and create greater management accountability. Publicly owned stock exchanges can enter into capital market for expansion of business. Publicly owned stock exchange would be more professionally managed than broker owned. Demutualisation enhances the flexibility of management.