Pop Art and Controversial Art Essay Example | Topics and Well Written Essays - 250 words

Pop Art and Controversial Art - Essay Example The creator of the paper expresses that Chicago Picasso may speak to a lady yet then again looks like either a pony or even a fowl, which can be named as a pitiless correlation of the woman. To my supposition, disputable workmanship edifies people in general about the truth while scrutinizing the standards. A portion of the Picasso’s works of art were marked as photography yet later the general public understood their suggestion. In this manner, the government’s move to boycott a questionable workmanship just blinds people in general on the real world, grasping on acknowledged culture. Pop craftsmanship can be utilized to allude to the new look of craftsmanship that exuded during the 1950s consolidating symbolism from the then mainstream society. Workmanship is an impression of the general public, and in this manner pop craftsmanship developed to incorporate qualities, for example, publicizing, news, etc that had been prohibited in the conventional expressive arts. Pop workmanship was raised by the innovation of media that overstated everything in the public eye. Desire of future turn of events and expanded progress additionally incited craftsmanship to reflect future wonder. Pop craftsmanship may be viewed as questionable, conceivably because of its planning. Be that as it may, assessing the fine arts with the cutting edge world position, the pop craftsman shows up exceptionally imaginative. Note that,â pop obscured the line among culture and workmanship, making it feasible for craftsmanship to obtain from any culture paying little mind to the latter’s position in the as of now characterize culture order.

Critically evaluate the remedy of constructive dismissal and the way Essay

Basically assess the cure of helpful excusal and the manner in which it works; and talk about the challenges associated with utilizing it (incorporate case-law on what is - Essay Example Different components that may trigger useful excusal are rolling out critical improvements in the employee’s work area at short notification, erroneously blaming a worker for misconduct6, for example, robbery or of being unequipped for completing their job7 and over the top demotion8 or teaching of representatives. Those case productive excusal are relied upon to have surrendered not long after the occurrence happened that constrained them to leave. The court in Courtaulds Northern Textiles Ltd v Andrew9 pointed out that ‘An business must not, without sensible or legitimate reason, behave in a way determined or prone to decimate or genuinely harm the relationship of trust and certainty between the business and the employee’. In a guide distributed by the Department of Trade and Industry on Employment Policy and Legislation 6 Jan 2007 direction is given to businesses on manners by which excusal ought to be led with the goal that cases of unjustifiable excusal or useful excusal can't be brought by employees10. The individuals who can valuable excusal are additionally qualified for guarantee for unreasonable excusal and much of the time somebody charging helpful excusal will likewise bring an activity for out of line excusal. For a council to concur that a worker has been productively excused the businesses activity must be with the end goal that it very well may be viewed as a critical penetrate of the work contract showing that the person in question means no longer to be limited by at least one terms of the agreement: a case of this may be the place the business subjectively downgrades a representative to a lower rank or less fortunate paid position. So as to guarantee valuable excusal the representative must fulfill 4 components. Initially there must be a break of agreement by the business. This might be either a genuine break or an expectant penetrate (for example the business will not guarantee the wellbeing of your customer by consenting to move the harasser if your customer comes back to work).

Argument Essay Topics Answers - 3 Simple Steps To Writing Better Essay Topics Answers

Argument Essay Topics Answers - 3 Simple Steps To Writing Better Essay Topics AnswersEssay topic answers are very essential in the thesis statement of an essay. The easy way to get more favorable essay topic answers is to use your own research. But you can also resort to online resources which provide you with free online research for essay writing, especially if you are a busy student and don't have time to do the research yourself.There are hundreds of different essay topics, some with a more or less complicated structure. Using the format and structure as a guideline, you will be able to easily determine the best answer to any question. If you don't know how to do this, you should go over the basic steps of essay writing before you begin to write your essay.After you have decided which essay topics you will use, start brainstorming. Try to think of different questions that may arise from your research. For example, you could answer 'how did Jesus die?' and discover what the answer is by doing some research.One of the best ways to answer the question is to look at the lives of those who lived during that time and they lived a significant role in the life of Jesus Christ. For example, Joseph of Arimathea, Joseph of Nazareth, and others.Go through the scriptures and read the book of Acts where the early apostles were living and writing about their struggles. You can relate this information to their life and see what happened with them in their ministry. From there, you can add other relevant facts into your answer, and it will not sound so far-fetched.Find out different history books and consult the works of famous authors like Shakespeare, Dickens, and others. If you're lucky, there might be a well known author that has a biography written about them and you can use this information to make your essay topics works of fiction.Answering the question 'what is truth?' is simple by looking at what truth actually is and what makes a true thing.Last but not least, tr y to use as many quotes and sayings as possible in your essay, especially to support your gre argument essay topics answers. Without context, any quote is basically useless.

Combat Stress - 671 Words

Combat Stress Yan E Oei ECPI University Abstract This research paper investigates the neurological disorder of Combat Stress. Combat stress is a short-term affliction caused by the traumatic effects of war. The historical perspective of combat stress were considered. The effects of combat stress on physical, emotional, mental and psychological parameters were analyzed. The ways of medical and psychological treatment were also mentioned. The cost of war weighs tremendously high, especially if one considers the individual human suffering and not just the loss of government property. When soldiers find themselves in the extraordinary and life threatening conditions, there is a high percent of combat and operational stress from†¦show more content†¦In this way, the most prominent physiological and psychological investigations were made. The effects of combat stress spread upon the physical condition of a soldier, as well as his mental acumen and emotional stasis. When a person undergoes combat stress, the Sympathetic Nervous System (SNS) goes into high gear. â€Å"SNS is activated when the brain perceives a threat to survival, resulting in an immediate discharge of stress hormones† (Grossman amp; Siddle, 2000). This may cause headaches, limb tremors or loss of speech power. The arterial pressure may rise and the tachycardia or arrhythmia appear. Soldiers often suffer from the tunnel vision, resulting in the loss of their peripheral vision. Thus, the orientation in space is lost. The basic emotional disorders are frustration, fear and loss of hope. The person may feel inadequate, demonstrate aggression, or become a threat for his surroundings. Even if the direct stimulus is present no more, the person may suffer from various flashbacks and nightmares. For this reason, sleep deprivation and chronic insomnia may occur. Fear is regarded as the strongest emotional reaction and is connected with two principle traumas. The first is associated with being the victim of aggression and the second is associated with the responsibility to kill (Grossman amp; Siddle, 2000). The necessity to interact with enemies on the field of battle in a kill-or-be-killed situation is extremely damaging for the conscience of theShow MoreRelatedSoft Spots : A Marines Memoir Of Combat And Post Traumatic Stress Disorder1711 Words   |  7 PagesSoft Spots: A Marine’s Memoir of Combat and Post-traumatic stress disorder It all began in 2003 when President Bush declared war on Iraq. He declared that, â€Å"Now that conflict has come, the only way to limit its duration is to apply decisive force† (Bush). Unfortunately, the war in Iraq became one of the longest and most controversial wars fought by America. Thanks to the sacrifices of the men and women in uniform, the mission ended in 2011. However, this war still lives in the hearts of those thatRead MoreAssessment And Treatment Of Combat Related Posttraumatic Stress Disorder Essay1598 Words   |  7 PagesAssessment and Treatment of Combat-Related Posttraumatic Stress Disorder The number of veterans returning from the Operation Iraqi Freedom (OIF), Operation Enduring Freedom (OEF), and Operation New Dawn (OND) conflicts that are afflicted with posttraumatic stress disorder is estimated to be in the hundreds of thousands (Kip, et al., 2013, p. 1298), demonstrating the importance of the social worker to be knowledgeable of the symptoms and treatment of this disabling trauma. The purpose of this literatureRead MorePost Traumatic Stress Disorder ( Ptsd ) And Its Effect On Combat Soldiers1004 Words   |  5 Pages This essay discusses Post Traumatic Stress Disorder (PTSD) and its effect on combat soldiers involved in the Afghanistan and Iraq Wars. The goal of this paper is to inform others about what the soldiers deal with during and after combat and the different treatments available for them to cope with and hopefully overcome this disorder. PTSD is an anxiety disorder that develops when someone is witness to or experiences a traumatic event. PTSD has specific symptoms resulting from traumatic life threateningRead MoreThe Combat And Operational Stress Control1354 Words   |  6 Pagesthat discussed the Combat and Operational Stress Control (COSC) program in the U.S Marine Corps, and it’s parallel in the U.S Navy, the Operational Stress Control that aims to prevent, identify, and treat stress problems being faced by the Marines, Sailors, and their families. The articles, however, offered different approaches on how its three primary components (stress continuum model, five core functions of a leader, and stress first aid) can be applied to preserve a combat and healthy force.Read MoreThe Care For Our Veteran Service Men And Women Has Been Inadequate Since The Founding Of Our Nation1914 Words   |  8 Pagessignify the day World War I ended. It was during this time a number veterans were returning home from comba t with signs and symptoms of present-day PTSD, than it was known as shell shock. â€Å"These symptoms included panic and sleep problems, among others† (Veterans Administration, 2016). Shell shock was the first known label given by the military service men and women suffering from the after effects of combat, in which a physical injury was not always present. Furthermore, the creation of any diagnosticRead MoreWomen in the Military1453 Words   |  6 Pagesnow the question of whether they can or even should fight beside men in combat has come up. Many people think that because almost the whole world has recognized that each individual has all the same basic rights, regardless of their gender or race, that everyone can do the same job equally. This is simply not true and women should not be allowed to serve in combat roles. Although the lifting of the ban on women in combat seems to be â€Å"pro-woman† it is not. It is putting them in harm’s way and notRead MoreWomen in Military1248 Words   |  5 Pages sailors, naval aviators and fighter pilots as men? Should women be allowed in the line of fire and in direct combat? What role should sexual harassment and fraternization play in the combination of women into the military? The real question, essentially, is not whether women can serve in any military capacity at all. The real question is whether or not women should be allowed in combat. To understand this debate it is important, as it is with any such discussion, to put the issue into historicalRead MoreThe Barbie Birthday By Alison Townsend And Let Women Fight By Megan M. Mackenzie952 Words   |  4 Pagesreferred to much more. While it is important to have the facts she listed, actual, multiple first-hand experiences would have made the article stronger. In addition, the author leaves out the opinion of men currently in the military. As changing of the combat regulation will affect men as well, more military men should have been quoted. While the piece does a good job of getting across the point, a few extra sentences would have done a lot. Equally important to leaving information out, the essays sometimesRead MoreWomen Should Be Legal For Combat977 Words   |  4 PagesWomen should be allowed to serve in combat roles in the military Some argue that women should not serve in combat because; they have never served in any type of combat operations in the history of the American military. Positions in the military have been designed specifically for women and how they perform their duties. No evidence can be produced that women have the abilities, physical strength, or motivation to engage in combat operations, the physical differences from their male counterpartsRead MoreMilitary Death and the Families’ Reaction to Losing Their Loved Ones1103 Words   |  5 Pagesfight for the rights of others and maintain this great level of freedom that our fathers, uncles and brothers fought for in the war. Since 2001, thousands of military soldiers have been shipped to Iraq and Afghanistan, where they have been killed in combat operations, where families of those individuals won’t see them again. Families who lose individuals during war face the similar grievances to that of other families. There are certain uni que aspects of military family lost that people should be aware

Domestic Violence Affects Children s Development

Introduction Thesis: Domestic violence can negatively affect children s development. (make more persuasive) Children all around the world witness domestic violence. Whether it s between parents, partners or even the elder. Does the parents, partners, or elder realize the affects that happen to their children? Witnessing domestic violence, children become fearful and anxious. They become this way because they never know when the next event may happen, fearing for themselves, mom or dad, and siblings. Also becoming worthless and powerless, feeling the need to keep their family a secret and/or not being able to talk to their own family about the abuse. Sometimes they feel like they are the reason why there is domestic violence in their home. If they look fine to you or others in the world that don’t know about their family, they truly may not be fine at all inside. As reading it doesn t seem that the children are being hit in any of the domestic violence, but the parent that is being hit from their partner fear for the child/children. Domestic violence, can negatively affect children s development. (try to make more persuasive) General information about domestic violence Body Paragraph 1: By being in a domestic relationship, you would be cautious on what you say and do. Domestic violence is not just hitting, it is also sexually, and mentally. If the partner that is being hit may or will move out, they may be stalked by their ex-domestic partner. Body Paragraph 2: In aShow MoreRelatedChildren And Domestic Violence Negatively Affects Children s Health And Development Essay1476 Words   |  6 Pagesexposure to domestic violence negatively affects children’s health and development. Millions of children are exposed to domestic violence on a daily. 3.3-10 million children are exposed to domestic violence annually (Wilson Pg.9). Many children’s futures are affected by the things they witness. Majority of what they witness alters they’re outlook on many situations that occur. There’s no secret that domestic violence has been around for decades. The first serious known case of domestic violence that actuallyRead MoreEffect of Domestic Violence on Children692 Words   |  3 PagesASSIGNMENT 1 DOMESTIC VIOLENCE ID: S99003183; URIAM ROBATI ABSTRACT Domestic Violence has a great effect on children. Domestic violence also known as domestic abuse, spousal abuse or child abuse is recognized as a pattern of abusive behavior by one or both partners especially those in marriage. This coercive behavior is used against another person to obtain power and control over the other party in a relationship. Domestic violence takes many forms such as physical violence which includesRead MoreDomestic Violence And Sexual Abuse896 Words   |  4 Pagesyoung age? Introduction: What is domestic violence? â€Å"Domestic Violence is a pattern of behaviors used to establish power and control over another person through fear and intimidation, often inclosing the threat or use of violence†(Safe Horizon, 2015). Domestic violence includes physical abuse, sexual abuse, emotional abuse, and exploitation; therefore, this is in relation to â€Å"intimate partner violence, battering, relationship abuse, spousal abuse, or family violence† (Safe Horizon, 2015). People usuallyRead MoreThe Cycle Of Domestic Violence1264 Words   |  6 PagesOne may wonder why some individuals remain in the cycle of domestic violence even after instances of abuse. Should it not be easy for an individual to leave a partner who is inflicting pain and stress on him or her? Lenore Walker’s (1979) model for the cycle of domestic violence explores the phases of domestic violence, the different types of abuse, and how these various phases contribute to the continuation of the cycle. Domestic violence is often diagnosed by obvious signs of physical abuse; howeverRead MoreChild Abuse and Violence Against Families1204 Words   |  5 PagesAbuse and Violence Against Females Domestic violence in the United States has become a major problem that affects nearly 2/3 s of all people. It can affect wives, the elderly, and even men, but in this paper we will discuss the abuse that occurs to children and also violence toward women. It is widely assumed that most estimates of the incidence of domestic violence are underestimates. Even large population surveys cannot provide accurate estimates of the extent of domestic violence. This isRead MoreDomestic Violence research proposal1573 Words   |  7 PagesAbstract The purpose of this study is to see whether or not domestic violence causes a damaging affect on children. The study will included criminal justice students in College and the age range will be between 18 and 23 years old. The method is qualitative and will be an interview. Introduction Domestic violence can be defines as a pattern of behavior in any relationship that is used to gain or maintain power and control over an intimate partner. AbuseRead MoreDomestic Violence And Its Effects On Children1445 Words   |  6 PagesWhat is domestic Violence? Domestic Violence is described as violent or aggressive behavior within the home, typically involving the violent abuse of a spouse or partner. Many children end up being the victims to seeing domestic violence in the home which is very unhealthy to their development. Some children may development resentment toward both parents- one for not leaving and the other for causing the abuse. Depression, aggressive behavior, emotional distress and suicide depending on the severityRead MoreDomestic Violence Has A Negative Impact On Children1568 Words   |  7 PagesOpen your eyes: Domestic violence has a negative impact on children. Being 8 years old and growing up witnessing domestic violence in my household was hard. â€Å"About 70% of domestic violence between couples goes unreported (S.N)† The reason the rate is so high is because fear overcomes the victim. The lack of someone being able to sit down and talk without being scared of getting home and getting beaten by their partner is bad, the reason of not being able to just sit down and talk to someone justRead MoreThe Effects Of Domestic Violence On Children780 Words   |  4 PagesDefinition/History/Statistics Historically, domestic violence has been a devastating social problem affecting individuals from every segment of the American society irrespective of race, class, age, religion, sexual orientation, nationality and economic status. Although, men to a smaller extent experience domestic violence, it is usually understood as a women s issue; which inadvertently affects children. Approximately, 85 to 95% of victims are females (Laney, 2010). Every 9 seconds in the UnitedRead MoreDomestic Violence And Children On Children1642 Words   |  7 PagesDomestic Violence and Children There are many studies that have been done over the past decade that does a comparison of children of domestic violence to those that have not experienced it. We cannot say for sure what number or percentage is affected each day or year. However, it is a widespread national problem that affects children today. Domestic violence has long been a hot topic and statics shows that† every 15 seconds a woman in the United States of America is beaten† (Beller 2015, p. 207)

Classroom Seating Arrangements For Adhd Students - 1759 Words

On the US Department of Education website these are some of the recommondations they have for teacher when it comes to teaching children with ADHD: Special Classroom Seating Arrangements for ADHD Students One of the most common accommodations that can be made to the physical environment of the classroom involves determining where a child with ADHD will sit. Three special seating assignments may be especially useful: Seat the child near the teacher. Assign the child a seat near your desk or the front of the room. This seating assignment provides opportunities for you to monitor and reinforce the child s on-task behavior. Seat the child near a student role model. Assign the child a seat near a student role model. This seat arrangement provides opportunity for children to work cooperatively and to learn from their peers in the class. Provide low-distraction work areas. As space permits, teachers should make available a quiet, distraction-free room or area for quiet study time and test taking. Students should be directed to this room or area privately and discreetly in order to avoid the appearance of punishment. Instructional Tools and the Physical Learning Environment Skilled teachers use special instructional tools to modify the classroom learning environment and accommodate the special needs of their students with ADHD. They also monitor the physical environment, keeping in mind the needs of these children. The following tools and techniques may be helpful:Show MoreRelatedAttention Deficit / Hyperactivity Disorder ( Adhd )1181 Words   |  5 PagesAttention Deficit/Hyperactivity Disorder (ADHD), a neurodevelopmental disorder, is becoming more and more predominant every year throughout the entire world. It is one of the most common disorders that today’s children have. According to the Centers for Disease Control and Prevention, â€Å"Rates of ADHD diagnosis increased an average of 3% per year from 1997 to 2006 and an average of approximately 5% per year from 2003 to 2011,† which illustrates that this disorder is becoming a common one to diagnoseRead MoreAttention Deficit Hyperactivity Disorder (ADHD) Essay1081 Words   |  5 Pag esAttention Deficit Hyperactivity Disorder What is ADHD? Attention Deficit Disorder (AD/HD) is mostly an organic problem, which tends to run in families. ADHD is the most commonly diagnosed behavioral disorder in childhood. An estimated 3 to 5 percent of the general population suffers from the disorder, which is characterized by agitated behavior and an inability to focus on tasks.  ¡Ã‚ § In the early 20th century, American doctors were discussing children who had problems similar to those describedRead MoreEssay On ADHD Treatment1682 Words   |  7 PagesKent Kade Parry English 1010 November 15, 2017 ADHD Treatment: Conventional or Differential Attention-deficit/hyperactivity disorder (ADHD) is a well-known and much debated neurological disorder. ADHD is the reoccurring pattern of inattention where a child wanders off task and has difficulty sustaining focus. Other signs of ADHD include hyperactivity-impulsivity where a child seems to move about constantly, and excessively fidget, tap, or talk. ADHD may also cause the child to make hasty actionsRead MoreEssay Understanding ADD and ADHD3219 Words   |  13 PagesUnderstanding ADD and ADHD First, it is important to understand ADD and ADHD and how they can be identified. Within the classroom, a teacher may encounter a student who constantly squirms in their seat, stares out the window, and has a desk that is a complete mess. These are not poor students who do not care about school and learning. Often these students may be undiagnosed cases of Attention Deficit Disorder or Attention Deficit Hyperactivity Disorder. These students can often be disruptiveRead MoreMy Experience At Groveland Park Elementary1397 Words   |  6 PagesGroveland Park Elementary I have been able to observe two classrooms that each offer a number of students. I have been enjoying the opportunity to observe and help out in a fourth grade class, taught by Ms. Hammes, and a second grade class taught by Mrs. Hyatt. All of the students vary in academic levels and abilities, some having exceptionalities or needs have to use resources that are offered by the school. I have been able to observe stude nts with learning disabilities, physical challenges, giftsRead MoreChildren s Diagnosis Of Attention Deficit Hyperactivity Disorder Essay2080 Words   |  9 PagesIn classrooms across America, students are being forced to sit in uncomfortable and unsupportive chairs. With longer days in classrooms, children are also having a greater difficulty of focusing. There has been great growth in children’s diagnosis of Attention Deficit Hyperactivity Disorder, making the long days at school difficult. Along with a higher frequency of diagnoses, childhood obesity has grown tremendously across the country. With little time being designated for children to release energyRead MoreChildren s Diagnosis Of Attention Deficit Hyperactivity Disorder Essay2228 Words   |  9 PagesStatement of problem In classrooms across America, students are being forced to sit in uncomfortable and unsupportive chairs. With longer days in classrooms, children are also having a greater difficulty of focusing. There has been great growth in children’s diagnosis of Attention Deficit Hyperactivity Disorder, making the long days at school difficult. Along with a higher frequency of diagnoses, childhood obesity has grown tremendously across the country. With little time being designated forRead MoreThe s Behavioral Problems With Adhd1041 Words   |  5 PagesMitchell is a boy in my class who is 12 years old and in Year 7. In the first week of term 2, his parents notified the school that Mitchell has been diagnosed with ADHD. In the previous term, he had behavioral issues in classroom. As his class teacher I choose four conceptual models to work with his behavioral problems. First one the board is Biological Model where behavior is viewed in medical perspective. Mitchell is prescribed with Ritalin by his doctor. This approach helps treating the biologicalRead MoreEssay on Section 504 and The Americans with Disabilities Act951 Words   |  4 Pagesindividuals. Each eligible student who is classified as a 504 student must be offered regular or special education with the needed aids and services to meet the educational needs of said student. Under the 504 requirements, you must have appointments with the 504 coordinator and parents comply with grievance procedures, and proper staff training. Most importantly, Section 504 and ADA use a more diverse definition of disability and an alternate approach for qualifying a student and parents are requestingRead MoreChildren With Attention Deficit Hyperactivity Disorder ( Adhd )1882 Words   |  8 PagesCharacteristics of ADHD There are different types in severity, characteristics or symptoms children with Attention Deficit Hyperactivity Disorder (ADHD) exhibit. Children with ADHD have strengths, average intelligence or diverse personality characteristics that should be accounted for. Their disability is defined with Inattention, Hyperactivity and Impulsitivity and each child exhibit different forms of these behavior characteristics. Attention Deficit Hyperactivity Disorder (ADHD) is a neurological

Preliminary Going Concern Assessment †Free Samples For Student

Question: Discuss About the Preliminary Going Concern Assessment? Answer: Introduction This assignment has been executed on the topic Strategic Business Risk Assessment, Inherent Risk Assessment and Preliminary Going Concern Assessment in which discussion will be made regarding the factors which have resulted in the rise in the Inherent Risk Assessment at Financial Report Level and the different inherent risk factors. Risk assessment is an important aspect which directly creates the impact on the performance of the business. A case study of One.Tel has been provided which was founded in Sydney, Australia in the year 1995. One.Tel is a global telecommunications company which is providing different services including low-cost international and national calls, prepaid and post-paid calling cards with GSM mobile phone services and internet services. 1. List and discuss several factors that would have contributed to an increased inherent risk assessment at the financial report level. Also, identify which of these factors may be identified during the strategic business risk assessment. There are several factors which have contributed towards the rise in the inherent risk assessment at the financial level for One.Tel. These factors are mentioned below: The absence of managerial skills: due to the lack of effective managerial skills, development process of the structure of the company has got affected along with the competitiveness of the company. This has increased the chances of material misstatement of the financial statements of One.Tel (Benson, et. al., 2016). Low operational profits: there is a rise in the debtors of One.Tel by 203 % in the consolidated results and in respective of this, there has been a very slow rise in the sales of the year 1998-1999. One.Tel is ineffective in enhancing the turnover and increases the profits in spite of having a large customer base (Cruz, et. al., 2015). Table 1 has attached below which shows the figures for the analysis of the key performance indicators. Table 1: Key Performance Indicators of One.Tel Parent Entity Consolidated Key Performance Indicators 2000 $M 1999 $M Change $M % Change 2000 $M 1999 $M Change $M % Change Receivables - Current Assets 104.0 58.9 45.1 77% 218.4 72.0 146.4 203% Sales Revenue 359.1 269.2 89.9 33% 653.4 326.0 327.4 100% Operating profit/(loss) after income tax (78.2) 7.9 (291.1) 7.0 Net Margin to Sales Ratio (%) -21.8% 2.9% -44.6% 2.1% Total Operating Cash flows (40.5) (0.9) (39.6) (168.9) (28.9) (140.0) Cash at the end of the year 164.2 170.8 (6.6) 335.7 172.6 163.1 Debtor Days (Days) 106 80 122 81 Lack of effective customer policies: it has been analysed from the above-attached tables that credit policies of the company are not effective which has been depicted from the higher receivables of One.Tel. Trade receivables in the consolidated and parent entity have increased twice in comparison to the revenue (Dash Mahakud, 2012). Hostile pricing policies adopted by the company in the competitive business environment: One.Tel had adopted a low priced strategy for pricing its products due to which it has developed large customer base but this has affected the revenue of the company due to the slow rise in the revenue (James, et. al., 2014). Lack of effective reporting in financial statements: the company must ensure that the financial statements must be presented in a fair and true manner. It has been identified that the financial statements of the company may be presented in an unfair manner. The worsening liquidity has raised a concern on the financial statements of the company (Kepper, et. al., 2014). There has been a rise in the intangibles of the company and scrutiny must be done of that. The deficit of operational funds: From the analysis of the cash flows of the company, it can be analysed that company has suffered cash losses from its operating activities. The cash losses have increased from $28.9 Million to $168.9 Million. Factors which can be identified during the strategic risk assessment are stated below: Credit policies for customers: increasing receivables shows that company has not collected cash from the debtors which have created the impact on the liquidity of the company (Kokolakis, et. al., 2010). Setting low prices for the products: One.Tel has set low prices which have affected the profitability of the company. Lack of effective company structure: lack of effective managerial skills has affected the structure of the company (Labbi, 2014). 2. List and discuss several inherent risk factors that would have contributed to an increased inherent risk assessment at the account balance level. There are different inherent risk factors which have resulted in the increase in the inherent risk assessment at the account balance level. These inherent risk factors must be dealt in an effective manner so as to ensure that the performance of the business is not getting affected due to these risk factors. Identification of these inherent risk factors must be done in an effective manner so as to eliminate the impact of these risks on the business and on its profitability and growth. One.Tel has adopted a low pricing strategy according to which it has set the prices of its products low. This has affected the profitability of the business at large. Prices of the products must be kept after proper analysis of the costs and profit margin of the company (Moss, et. al., 2010). This will ensure that the profits of the business are not getting affected. Another factor which has acted as an inherent risk factor is the lack of effective managerial skills which are responsible for the ineffect ive structure of the company. One.Tel has started its operation in 1995 and due to this short span of time; it doesn't have effective managerial skills for the management of the operations of the company. One.Tel has adopted poor credit policy due to which inherent risks have increased. One.Tel has also suffered cash losses from its operating activities. There has been the rise in the sales of the company but this sales growth has not contributed towards the increase in the profitability of the company. It has also faced ineffectiveness in the preparation or reporting of the financial statements of the company (Martin, et. al., 2013). All these inherent risk factors have increased the risk of the company. There is a need to adopt effective credit policy which will help in enhancing the satisfaction level of the customers. Effective pricing policy must be adopted so as to ensure that One.Tel is generating high profits as well as maintaining the large customer base. Managerial skills must be developed for the purpose of ensuring that the company is performing well and structure of the company is maintained. For gaining the competitive advantage there is a need to enhance the managerial skills and enhancing the profitability of the business. Pricing policy must be adopted in an effective manner for the Land-based phone lines, Internet services and Mobile telephony services. 3. Do you believe that the area of going concern should be assessed as high, medium or low? Identify the factors that are the basis for your decision. A company must maintain its accounts in a fair manner so as to present a true and fair picture of the company. After analysis of the financial performance of One.Tel, it can be stated that the assessment of the area of going concern must be done at the high level. The reasons or the factors responsible for this decision are mentioned below: The company has generated cash losses from its operating activities which show that the intangibles of the company have increased at large which creates suspicion. One.Tel has purchased plant and equipment which have affected the liquidity position of the company at large (Nwogugu, 2012). The decrease in profits and increase in cost: Sales of the company have increased but this has not contributed at large to the profits or revenues of One.Tel due to the low prices of the products. This has resulted in the rise in the cost of the company. It is tough to analyse whether the company can earn high profits and recover losses after the rise in the sales (Ruhnke Schmidt, 2014). The liquidity of the company is depleting as there is a rise in the receivables of the company which shows that company is not capable of recovering the cash from its debtors. Management of One.Tel must take steps for resolving this issue and till that issue is not resolved assessment must be done at high priority (Telfer, et. al., 2010). Conclusion From the execution of this assignment, it can be concluded that risk associated with the business must be analysed so as to enhance the performance of the business. This assignment has discussed different factors which are responsible for the increase in the inherent risk and these factors include lack of effective customer policies, hostile pricing policies adopted by the company in the competitive business environment, lack of effective reporting in financial statements and deficit of operational funds. The discussion has been made regarding the factors which are responsible for the manner in which assessment needs to be done of the area of going concern. References Benson, O., Gibson, S., Boden, Z., Owen, G., 2016, Exhausted without trust and inherent worth: A model of the suicide process based on experiential accounts, Social Science Medicine, 163, 126. Cruz, M., Peters, G., Shevchenko, P., 2015, "Fundamental aspects of operational risk and insurance analytics a handbook of operational risk (Wiley Handbooks in Financial Engineering and Econometrics)", Hoboken: Wiley. Dash, S. R. Mahakud., J., 2012, Investor sentiment, risk factors and stock return: Evidence from Indian non-financial companies, Journal of Indian Business Research, 4(3), 194-218. James, L., Kelly, P., Beckman, V., 2014, Injury Risk Management Plan for Volleyball Athletes, Sports Medicine, 44(9), 1185-1195. Kepper, A., Eijnden, R., Monshouwer, K., Vollebergh, W., 2014, Understanding the elevated risk of substance use by adolescents in special education and residential youth care: The role of individual, family and peer factors, European Child Adolescent Psychiatry, 23(6), 461-472. Kokolakis, Artemi, Smith, Carolynn L., Evans, Christopher S., 2010, Aerial alarm calling by male fowl (Gallus gallus) reveals subtle new mechanisms of risk management, Animal Behaviour, 79(6), 1373. Labbi, A., 2014, Handbook of Integrated Risk Management for E-Business Measuring, Modeling, and Managing Risk, Boca Raton: J. Ross Publishing, Incorporated. Martin, P., Wagenmakers, E., Tremblay, P., Ramsay, R., Kralovec, K., Fartacek, C. Fartacek, R., 2013, Suicide Risk and Sexual Orientation: A Critical Review, Archives of Sexual Behavior, 42(5), 715-727. Moss, Edmonds, Hibbard, Manning, Rose, Van Vuuren Wilbanks., 2010, The next generation of scenarios for climate change research and assessment, Nature, 463(7282), 747-56. Nwogugu, M., 2012, Risk in the Global Real Estate Market International Risk Regulation, Mechanism Design, Foreclosures, Title Systems and REITs (Wiley Finance), New York: Wiley. Ruhnke, K., Schmidt, M., 2014, Misstatements in financial statements: The relationship between inherent and control risk factors and audit adjustments, 33(4), 247-269. Telfer, S., Lambin, X., Birtles, R., Beldomenico, P., Burthe, S., Paterson, S. Begon, M., 2010, Species Interactions in a Parasite Community Drive Infection Risk in a Wildlife Population, Science, 330(6001), 243-246.

Anne Essay about Environmental Collapse Essays

Anne Essay about Environmental Collapse Essays Anne Essay about Environmental Collapse Paper Anne Essay about Environmental Collapse Paper The world today is encountering a lot of environmental problems. One of these problems that is evidently seen everywhere is pollution. Pollution is the addition of chemical or physical agents to the air, water, or land in an amount that can threaten human health, plants, and wildlife. It also lessens the human enjoyment of the environment. Pollution is mainly caused by the people, and this results in natural disasters, dirty and contaminated environment, and diseases. The primary cause of pollution is the people. As we all know, our country is overpopulated and consequently, it adds up to the pollution. Since there are many people, a lot of space is being occupied. The place gets crowded, thus not having room for air, noise, and garbage disposal. The lack of discipline and selfishness of people also worsen pollution. Undisciplined people throw their trash anywhere they want to while selfish people do not care about what is happening around their environment. Instead of the people helping diminish pollution, they become the ones aggravating it even more. Lack of dumpsites also increases pollution because people don’t have enough space to throw out their garbage. Pollution also has its adverse effects such as natural disasters, diseases, dirty and unpleasant environment. Natural disasters such as flood and erosion occur because of pollution. Floods take place because trash that is not thrown in the proper place clog the sewers and drainage. Erosion, on the other hand, takes place because of the rubbish buried under the soil. The soil could not hold anymore because of abundant trash buried under, thus causing soil to erode. Another consequence of pollution is diseases. People get diseases such as cholera and amoebiasis from contaminated water, which is again due to the garbage thrown in rivers or other bodies of water. These diseases could also lead to death sooner or later. Pollution also makes the environment dirty, messy, and unpleasant to look at. We can see that pollution causes diseases, natural disasters, and dirty environment. In order to lessen these things, we must act responsibly, take care and be more conscious of our environment.

Closer look at teens essays

Closer look at teens essays It is important not to overreact to isolated incidents. Young people will have problems and will learn, at their own rate, to struggle and deal with them. But it is critical for parents and helping adults to be aware of the factors that put a youth at particular risk, especially when stressful events begin to accumulate for these vulnerable individuals. A good starting point for identifying and intervening with highly troubled and depressed young people is the careful study of suicidal adolescents. Family history and biology can create a predisposition for dealing poorly with stress. These factors make a person susceptible to depression and self-destructive behavior. History of depression and/or suicide in the family Alcoholism or drug use in the family Sexual or physical abuse patterns in the family Chronic illness in oneself or family Family or individual history of psychiatric disorders such as eating disorders, schizophrenia, manic-depressive disorder, conduct disorders, delinquency Death or serious loss in the family Learning disabilities or mental/physical disabilities Absent or divorced parents; inadequate bonding in adoptive families Family conflict; poor parent/child relationships Personality traits, especially when they change dramatically, can signal serious trouble. These traits include: Impulsive behaviors, obsessions and unreal fears Aggressive and antisocial behavior Withdrawal and isolation; detachment Poor social skills resulting in feelings of humiliation, poor self-worth, blame and feeling ugly Over-achieving and extreme pressure to perform Problems with sleeping and/or eating Psychological and social events contribute to the accumulation of problems and stressors. Loss experience such as a death or sui ...

The Transparency in Corporate Governance Essay

The Transparency in Corporate Governance - Essay Example Shareholders and investors are being defrauded and deceived on the real status of earning and expenses within the firm through financial statements that are not entirely accurate. Such failures of corporate governance have produced a negative impact on investor confidence and made them question the integrity of information that is provided in the financial statements of a corporate entity.1 The development of corporate governance codes has as its primary objective, the restoration and increase of investor confidence through increased accountability and transparency in corporations2. Effective corporate governance enhances investor confidence, enhances competitiveness and ultimately contributes to economic growth. Transparency in corporate governance implies a lack of opacity or secrecy in financial operations and is thus associated with full disclosure of financial and operational information. Transparency implies that there are no hidden agendas and that clear information is provided, not only on financial and operational aspects but also on the internal processes of management overseeing and control systems. It is on the basis of such complete disclosure of information that a meaningful analysis of the Company can be made and outside investors who put their money into an organization can understand its operations clearly and make good investment decisions. Transparency can therefore mitigate the risks associated with corporate governance and the potential for corporate scandals. In countries such as the USA and the UK, ownership of shares in corporations extends over a widespread shareholder base. This leaves scope for potential conflict, arising between the interests of the stakeholders in the corporation and the Boards of Directors who could allow their own self-interest to influence organizational decision-making.

A deeper look on the reincarnation Essay Example | Topics and Well Written Essays - 750 words

A deeper look on the reincarnation - Essay Example Hinduism is known to be one of the largest religions in the world. It offers a system of beliefs that not only Indians have embraced but are also perceived to be true by some people from all walks of life and racesOne of the famous beliefs of Hinduism that this writer knows about through lessons in school and readings of books is reincarnation. Hindus believe that when a person dies, s/he will be reincarnated to some animal or another human being depending on how a person lived. If a person lives a good life, he will be rewarded in the form of a second life as a person of a higher status in the Caste System. However, when one is not good, he can be demoted to a lower level of person or an animal. For instance, a member of the royal family has been doing bad things in his life as a prince, princess, king or queen; s/he can become a slave in the next life. If a common man or a slave does not behave well, he will be punished and become an animal in his next life. But if that common man or slave does good things in his present life, his next life can be that of a rich person. Reincarnation is a common belief in Hinduism but it is known to have been found among many primitive people in Ancient Greece and Egypt as well (Jones, Whitney and Nault, 8118). According to Enroth, the belief had its origin in Northern India, around 1,000-800 B.C. (2012). Tracing the history of Hinduism, it is said to have emerged from several people of different generations that no one is acknowledged as the sole originator of the religion. There are three periods of the Hinduism wherein beliefs have been acquired and put together to become the modern Hindu religion. The pre-Vedic period, around 3,000-1500 B.C., reflects the animism while the Vedic period introduced polytheism and the caste system, a social scale that was to be incorporated in the belief in reincarnation. The third period in Hinduism is called the Upanishadic period where reincarnation was birthed (Mather and Nichols, 116-11 7). In the process, it is believed that reincarnation takes a lot of times until a person is purified. Only then could a person be able to return to the dwelling place of its god known by Buddhists as Nirvana and for the Brahmanic Hindus, the purified person will be reunited with Brahma or the Universal Power (Jones et al., 8118). According to the World Book Encyclopedia, superstition literally means â€Å"that which stands above, or survives† and further goes on to consider that the opposite of superstition is science, based on observations and reason (Jones et al., 7810). As a belief that cannot be scientifically proven, reincarnation is considered a superstitious belief. It is argued that no one can really prove that a person is a reincarnation of someone who lived in the past however Kevin Williams claims that he was able to prove the validity of reincarnation. In his research, he was able to have twenty children describe spontaneously their past lives by the time they we re able to talk. He even challenges skeptics to do the same experiments themselves. However, on the scientific point of view, this is not enough evidence to claim the fact of reincarnation. John Von Ward claims that, â€Å"A theoretical model or reincarnation based on behavioral evidence will be much more credible than one based on dreams, hypnotic information or extra-dimensional material. People will find the theory much more persuasive if it is based on tangible evidence like physical skills, creative talents, habits, postures, etc than on easily fabricated products of mind.† The belief on reincarnation can be detrimental. The idea of having another life after the present life can make an individual go to the extreme of acting badly with the thought that there will be another life where one could redeem him/herself anyway. People are given the tendency to rely on dreams, hypnotic regressions and other manners of acquiring information about a person’s life. This enco urages them to concentrate on the quest to

Nokia Essay Example for Free

Nokia Essay 1. What are the trends in the mobile handset Industry? What is Nokia’s strategy and how has globalization changed its way of operation? The major trends in the mobile hand set industry according to www.strandreports.com are the treat and possibilities of the Discount Mobile Service Providers, falling profit margins on basic mobile services as a result of competition, the use of outsourcing, controlled investments in infrastructure, and higher marketing expenses partly because of the use of micro segmentation. Nokia’s strategies are the strength of its brand, supply chain efficiency, and its dominant position in emerging markets. Globalization has changed Nokia’s way of operations by trying to find country’s where they can pay its workers less, and in the long run make more profits. 2. Was the German Backlash against Nokia justified? How can nations make themselves more competitive? In my opinion I believe that the German backlash against Nokia was justified. This is due to the fact that Nokia didn’t repay the 41 million Euros ($63 million) in subsidies it had been given for locating its closed mobile phone plant in Bochum to Romania. Also I feel that it was unjust that Nokia closed the plant in Bochum because it was highly profitable, and the German workforce is far more skilled, well educated, productive, and is one of the world’s highest wage and benefits earners. Nations can make themselves more competitive by increasing their education systems in the country, and also by increasing their trade and communications with other countries. 3. What, if any, were the flaws in Nokia’s approach to announcing and handling its plant closure? What can the company do now for damage control? Nokia’s main flaw in its approach to announcing and handling its plant closure in my opinion was that they had no clear explanation of why such a profitable company needed to close a productive factory. What Nokia can do now is apologize to all the people that they put out of work, and repay the 41 million Euros ($63 million) in subsidies it had been given to the German workers that deserve it. 4. What did I learn from this case study? From this case study I learned that Nokia is the largest mobile handset maker in the world with a 40% market share. Nokia also produces four out of every 10 mobile phones sold worldwide and is well ahead of it competition on the strength of its brand, supply chain efficiency, a dominant position in emerging markets, understanding consumer needs and providing phones ranging from less than $50 to advance services featuring satellite navigation and email. Also that business is business and Nokia found a more profitable location for its factory in Romania even though the German factory was extremely profitable, and it never suffered a loss. Nokia put a lot of people out of jobs due to the closing of the German factory, they saw that the factory only made sense in the short term, and Nokia as a global competitor needs to focus on the long term goals to stay ahead of it competition.

The Anthropic Prohibition on Preemptive Warfare Between States :: War Wars World Politics Essays

The Anthropic Prohibition on Preemptive Warfare Between States When considering the pre-emptive strategic approach, it is useful to reduce hypothetical scenarios to a humanly comprehensible level. War, natural disasters, and other events of this magnitude are beyond a mind’s comprehension in their totality. By using a domestic analogy, such as advocated by Christian Wolff, where â€Å"states are regarded as individual free persons living in a state of nature,† the moral and legal implications of pre-emptive actions can be seen more clearly (Jus Gentium Methodo Scientifica Pertractatum,  §2, p.9). The advent of pre-emption has coincided with an explosion of non-state actors on the military stage, and it is therefore important to expand the analogy beyond states; the analogy is otherwise only applicable to nations in a macroscopic political arena, such as existed before World War I. This paper will expand Wolff’s conception of the domestic analogy to embrace and differentiate state actors and non-state actors, and use this e xpanded principle to produce scenarios in consideration of pre-emption. The examination of these scenarios will yield that preemption is a morally wrong military strategy between states, though state interaction with non-sovereign actors is far more ambiguous. We can extend the domestic analogy of Wolff, to make a general anthropic principle (human-like principle), which states that any group of people, whether a state or an organization, can be made analogous to one person. Both states and organizations have governing bodies composed of people, and these bodies make individual decisions, which in turn affect larger groups of people. Though it is more difficult to reconcile many competing individuals vying for a specific decision or policy within one organization, this can be represented as competing elements of a human mind, such as emotion and reason or desire and conscience. Usually, a conflict between elements is resolved in some manner and a decisive moment occurs, whether it is an individual or an organization. This anthropic principle can continue farther in analogy and embrace more unorthodox situations as well. A state thrown into anarchy, without any discernable authority, is similar to some mental disorders, where competing elem ents in the mind eliminate the faculties of reason. The actions of terrorist organizations, nations, independence movements, and any other artificial construct to group people can all be compared to the actions of one individual person for ethical examination. This is an important acknowledgement, because the Al Aqsa Martyrs brigade, the Tamil Tigers, al Quaeda, and the Irish Republican Army are all significant players in the current geopolitical stage: global politics are not limited to state entities.

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