Biology Research Essay Example | Topics and Well Written Essays - 500 words

Biology Research - Essay Example This is due to the light reaction of photosynthesis, which splits the water molecule and releases the oxygen in the process. The sugar would be radioactive in the example where the plant was supplies carbon dioxide with radioactive oxygen. This is a result of the Calvin cycle, which uses the carbon dioxide to process into sugar. Question 2: Some animal species can reproduce either asexually or sexually depending on the state of the environment. Asexual reproduction tends to occur in stable, favorable environments; sexual reproduction is more common in unstable or unfavorable circumstances. Discuss the advantages or disadvantages this pattern might have on the survival of the species in an evolutionary sense or on survival of individuals. Answer 2: Asexual reproduction has the advantage of creating many offspring that are generally mature plants and not as frail as sexual seedlings. They reproduce easily and efficiently and are able to cover a habitat and reduce competition from other species. However, because they are essentially clones, they are sensitive to adverse environments such as pathogens and disease, which could wipe out the entire stand. Sexual plants, dependent on seeds, have the disadvantage of producing seeds which must germinate and grow. This requires ideal conditions to establish new plants.

Subhash Chandra Bose Essay Example for Free

Subhash Chandra Bose Essay Subhash Chandra Bose was born on January 23, 1897 at Cuttack, in Orissa. He was the sixth son of Janakinath and Prabhavati Bose. Subhash was an excellent student and after school joined the Presidency College, Calcutta, where he studied philosophy, a subject he was interest in. As a young boy Subhash felt neglected among his 8 siblings. At his English school he suffered under the discrimination faced by Indians which made him even sadder. He wanted to work for the poor but his father, had other ideas. He sent Subhash to England to appear for the Indian Civil Service. In July 1920, barely eight months later Subhash Chandra Bose appeared in the Civil Service Examination and passed it with distinction. But he didnt want to be a member of the bureaucracy and resigned from the service and returned to India. Back home, he participated in the freedom movement along with Deshbandhu C. R. Das. He was thrown into jail but that only made him more determined. Subhash joined the congress and rose to its Presidentship in 1938 a post he held for 2 years. In 1939, when the Second World War started Gandhiji and other leaders were against doing anything anti-Britain. But Subhash thought differently. He knew, for instance, that the fall of the Roman Empire had led to the freedom of its colonies. He decided to seek foreign help for his cause of freeing India. He was arrested and kept in his house under detention. On January 17, 1941, while everyone was asleep, Bose slipped out of his house into a waiting car. Disguised as a Muslim religious teacher, Bose managed to reach Peshawar two days later. Bose went to Italy, Germany and even Russia to seek help but without much use. Subash decided to organize Indians on his own. He landed in Singapore and grouped Indians there into the Indian National Army or the Azad Hind Fauj and declared himself the temporary leader of the free Indian government. Japan, Germany and Italy recognizied Subhashs government and the whole of India rejoiced. The INA marched to Andaman and Nicobar islands, liberating and renaming them as Shaheed and Swaraj islands. On March 18, 1944, it crossed the Burmese border and reached Manipur where free Indias banner was raised with the shouts of Jai Hind and Netaji Zindabad. But heavy rain prevented any further movement and the units had to fall back. Even then Netaji was determined. On August 17, 1945, he issued a Special Order to the INA which said that Delhi is still our goal. He then wanted to go to Russia to seek Soviet help to fight the British. But the ill-fated plane in which he was flying, crashed in Taipei on August 18, 1945, resulting in his death. Some people believe that Subhash Chandra Bose didnt die, that he faked his own crash to escape the British who wanted to arrest him. There were even reports of Bose living in Russia and other foreign countries, even some claims of having seen him as a sadhu, but none were ever proved and today his death in the plane crash is the accepted version.

The True Story of the 3 Little Pigs by A. Wolf Essay -- Childrens Lite

The True Story of the 3 Little Pigs by A. Wolf Have you ever wondered what the wolf's side of The Three Little Pigs story was? Well, Jon Scieszka gives his readers the opportunity to see a different perspective dealing with this very circumstance. In many of his books, including The True Story of the 3 Little Pigs by A. Wolf, Scieszka has used this style of writing that varies from the norm. Every turn of the page gives rise to new wonder and suspense as to what the reader will encounter as he or she moves through the pages of this intriguing book. Many of us grew up hearing fairy tales and nursery rhymes and most of us accepted them the way that they were. However, Jon Scieszka likes to take his readers on "adventures" through the "other side." He twists well-known stories around just enough to challenge the view that we have had for so long, yet not so much that we are unable to realize what story he is "imitating" or "mocking." The story of the three little pigs traditionally makes the wolf out to be bad and ends with the third little pig triumphing over the huffing, puff... The True Story of the 3 Little Pigs by A. Wolf Essay -- Childrens Lite The True Story of the 3 Little Pigs by A. Wolf Have you ever wondered what the wolf's side of The Three Little Pigs story was? Well, Jon Scieszka gives his readers the opportunity to see a different perspective dealing with this very circumstance. In many of his books, including The True Story of the 3 Little Pigs by A. Wolf, Scieszka has used this style of writing that varies from the norm. Every turn of the page gives rise to new wonder and suspense as to what the reader will encounter as he or she moves through the pages of this intriguing book. Many of us grew up hearing fairy tales and nursery rhymes and most of us accepted them the way that they were. However, Jon Scieszka likes to take his readers on "adventures" through the "other side." He twists well-known stories around just enough to challenge the view that we have had for so long, yet not so much that we are unable to realize what story he is "imitating" or "mocking." The story of the three little pigs traditionally makes the wolf out to be bad and ends with the third little pig triumphing over the huffing, puff...

Personal Space in a Digital Age by Robert Sommer Essay -- gender, space

Robert Sommer, author of the text. Personal Space in a Digital Age suggests a relationship between age and gender in determining of personal space. He explains, â€Å"It has been interesting to observe personal space enter the popular culture. Airlines advertise more of it in their seating, homeless shelter residents complain that they have too little of it, and corporate training manuals warn employees to respect each other’s personal space. What is clear is that the concepts of personal space and interaction distance have lasted four decades and show no sign of disappearing even in a digital age when communication is increasingly aspatial.† Although most people feel bothered about questions of personal space, gender and age determines when a person begins to feel uncomfortable because psychology explains that people care who is in their space, because that researchers have proved that gender and age matters, because age research proves that when their personal space by both older or younger people they feel uncomfortable, and because the research on gender proves that when people are invaded by the opposite sex they also feel uncomfortable. Personal space has many factors that affect how different people react such as their culture, gender, race, age, etc. (The Development of Personal Space in Primary School Children - Springer 195). Personal space is when someone feels uncomfortable in his or her own space or bubble (Personal Space 1). People call their space a bubble so when someone gets to close it might pop (Wells 1). One-person controls how big or small the bubble is (Wells 1). There are four areas that break down space (Igarashi, Stade, and Vriens 4). Internal, mental, physical, and spiritual are the four boundaries that de... ...ells, Meredith M. "Measuring Personal Space." Psychology Teacher Network. N.p., 2002. Web. 15 Nov. 2013. 0CCkQFjAA&url=http%3A%2F%2Fwww.apa.org%2Fed%2Fprecollege%2Fptn%2F20 02%2F01%2Fissue.pdf&ei=ClSGUvXYMJCqkAfolIBY&usg=AFQjCNHZbzD_daKQY iRO5yr6xflgycn6Qg&bvm=bv.56643336,d.eW0>. Widang, Ingrid. "Patients’ Conceptions of Integrity." N.p., 2007. Web. 13 Nov. 2013. =0CDQQFjACOAo&url=http%3A%2F%2Fwww.diva- portal.org%2Fsmash%2Fget%2Fdiva2%3A4541%2FFULLTEXT01.pdf&ei=00GAUu2t OaPsyQGGuoFY&usg=AFQjCNE1Ifvl9dYscCwBYtqrRNaLA4u12Q>. Wolchover, Natalie. "Why Do We Have Personal Space?" Web log post. Live Science. Natalie Wolchover, 6 June 2012. Web. 3 Nov. 2013. personal-space.html>.

MSU Application Essay

High school times were tough years I have surpassed as I am about to enter a new level of my education, College. I always dream to be in a high standard University where I know, can polish much my knowledge, not only give me knowledge in my chosen field but also to inculcate in my being the attitudes and ideals every person needs to succeed in every endeavor they undertake. I am from Indonesia; I want to study in Michigan State University for I know it can meet my educational needs and help me to achieve more in my life. Not all of the students are given such great opportunity to be part of this University. Being a student of MSU is just like one step away from the green pastures, a place where success are easily within my reach if I will just strive hard to achieve it. As an international applicant as I am from Indonesia, I believe I could greatly contribute much to the cultural life of Michigan State University, in the manner that I can share to other students the values, beliefs, traditions of my country. Even if I am already in a foreign land, I could still preserve my culture and not just totally forget about it. I will be very proud to share, to cultivate more the values my home land has implanted in my being. I will show to them how an Indonesian respects other people, the elders, the beliefs and traditions of other denominations, religious groups and how to treat those who other people thought does not deserve any respect at all. As an Indonesian, I was brought up to be an educated individual. Way back in Indonesia, I always see to it that I never hurt or break our families’ rules, even our schools’ rules and policies. For me, breaking a law that you know is bound to any punishment is negligence and is not showing any responsible attitude reflected by the upbringing of one’s family. I also have been to many trials as a student but this does not stopped me from dreaming more. I dream to be a successful individual, and a better person whom people sees as an epitome of diligence, courage, love, justice and integrity. Diligence in what I am doing, I see to it that I give my all and not just mediocrity, letting the people know that even I am from a foreign country I can still manage to excel; Courage, having the courage and strength to persevere amidst all trials and difficulties that an ordinary and weak spirit will almost surrender; love, having the passion in doing things related to my chosen endeavor, like in my studies and other school projects and not thinking of the hindrances; Justice and Integrity are those essential ingredients of becoming a great student, not just an ordinary student applicant from Indonesia, but an Outstanding and Exemplary student from Indonesia, who dreams and is working in that dream to become into reality. Not minding the boundaries, thousands of kilometers, miles, several oceans to cross; but the dream of having a great and successful future in Michigan State University. I know that I can be of great influence to other students, to individuals in the community that sometimes thought that one can never do great big things. I will show to them that I may not be perfect in terms of physical attributes, intellectually but I know that I am real and I will strive hard, be willing and be always determined to persevere. Just fight, fight, fight. For I know I am going to reap my reward if I will just stay strong and not frail and not lose hope. I firmly believed that on my way to my success in the future are my family, friends and colleagues support towards me. Their undying love, support and faith in me keeps me going on.

The soul essays

The soul essays Out of all the philosophers we have examined in this unit, Ren Descartes (On Thinking and the Soul) presents the best argument about what a soul and body are. In contrast, I believe that Lockes interpretation of the body, mind, soul and self was my least favorite interpretation. Ren Descartes believed the soul is a pure, unitary thinking thing that has no weight and occupies no space. The soul, according to Descartes, has clear and distinct ideas of matters that can be conceived of in mathematical terms. The body, according to Descartes, is a material thing that operates mechanically, in accordance of cause and effect. The body moves mechanically through muscles and nerves and generates its own heat. Identity, Descartes believed, comes from the soul. The body acts as a container for the soul and is completely separate from a persons identity. Descartes also believed that thoughts in the soul depend only on the soul and not on the body. Therefore, since the only thing that the soul ca n do is think than he must be a soul. Locke believed that Descartes equation of the soul is completely false. Locke noted that if the soul left the body during sleep (Descartes) than it could body hop into other individual. This outcome of Descartes theory is completely absurd to Locke. Locke believed that the identity of a person comes from his/her body. According to Locke, the same soul criterion used by Descartes wont do as an explanation. He believed that same matter could not be used as a criterion for human identity because matter in ones body turns over through the death of old cells and the birth of new ones. I agree with Descartes notion of self-identity because the soul is separate from the body. I believe that ones body is plagued with several particulars such as hair, arms, legs etc. The soul is a universal entity, meaning everyone has one. I disagree with Lockes account of the body as a pers ...

Using Technology Wisely in Schools essays

Using Technology Wisely in Schools essays Wenglinskys publisher is Teachers College Press, and in fact, Wenglinsky is a research scientist, advocate for the modernization of schools and teacher who has testified before the U.S. House of Representatives on school issues that have nothing to do with technology. His book offers both wisdom and practicality, and he suggests that of the two philosophies styles of teaching, didactic and constructivist, when embracing computer technologies in classroom, the best approach is constructivist. In fact, the word constructivist appears continually in his book. Constructivist is the best policy first of all because, as he writes on pages 8-9 of his Introduction, the teachers role is not to hand out drills as assignments and sit in front of her own computer playing solitaire (the didactic approach). In fact the teacher as a constructivist will use computers as a tool to concretize concepts; this opens the door to the teachers opportunity to try to convey the initial abstraction in a way that students will then convey to one another. The constructivist teacher uses technology correctly and hence teaches students complex problem-solving skills in an iterative process that moves from abstractions to concrete examples, where students control most of the learning process, Wenglinsky writes on page 11. Basically, he is saying teachers trained properly in technology can empower students to think and problem-solve on their own. That having been pointed out, Wenglinsky wonders, What is the value-added of the technology above and beyond good teaching? The answer is that computers are like language, Wenglinsky continues; and instructors and teachers are working at the highest level of efficiency when they speak the same language, and employ the tools that can make a better future for all. In his Chapter 1, the author runs through the legislation and st...

Fats essays

Fats essays Fat is an important part of our diet; it is one of the nutrients that make up the foods we eat. Fat is one of the richest sources for energy. One gram of fat equals to nine kilocalories of energy. They are insoluble in water. They are mixture of lipids and fat soluble vitamins. Although it is absolutely necessary to have fat in our diet, too much of it can affect your health. Fats have numerous responsibilities in our body. The one most individuals have noticed is that they improve the taste of the food and promote digestion. Fats provide the body with energy. There are different forms of fat and they function in different ways. The main types of fat are saturated, polyunsaturated, monounsaturated and trans fat. Some of these forms are good and some are bad. Usually, the bad fat is saturated fat because they tend to raise blood cholesterol level especially the LDL cholesterol which will lead to an increase of heart diseases but saturated fats are also needed for proper alignment of growth factors in cells and organs. It is also an excellent source of energy. Polyunsaturated fat have both good and bad sides. The good thing about polyunsaturated fat is that it contains essential fatty acids that you need to maintain your health. (Even though you need only a little) If you substitute polyunsaturated fat for saturated fat, you can help lower your total cholesterol by decreasing levels of LDL cholesterol. The bad thing about polyunsaturated is that it is more likely to react with free radicals in a process called oxidation which can very bad for your health. Monounsaturated fat can help lower levels of your total cholesterol and LDL cholesterol. They also raise your HDL cholesterol levels. Some oils such as olive and canola are rich in monounsaturated fat and low in saturated. ...

Managing and Leading Strategic Change Essay Example | Topics and Well Written Essays - 3000 words

Managing and Leading Strategic Change - Essay Example Literature Review Henry Mintzberg in his famous research papers has pointed out three important characteristics of strategic change management. Discussing three characteristics of strategic change management will help me to understand key driving forces like leadership, learning and communication for change process. This discussion will create a link between academic theories with leadership issues in P&G during their change management process. Strategic Management versus Strategic Thinking Organizations use strategic management to operate business and control functional aspects of various departments while leaders’ use strategic thinking is synthesizing root maps to achieve organizational objectives. Strategic thinking played vital role for change process in P&G. Strategic Management Requires New Initiatives Leaders planning for strategic management need to think out of the box in order to incorporate breakthrough change. Informal learning should be encouraged in order to ach ieve sustainable change management. Research scholars have found that rearranging older concepts in order to accomplish change management often produces failure due to dynamic nature of strategic management. P&G had successfully used the concept of informal learning to accomplish the required change business model. Fallacy of Detachment Senior managers often fail to detect key issues of strategic change management due to various reasons such as complete detachment with employees of the organization, lack of communication with subordinates (Mintzberg, 1994). P&G had successfully mitigated the probability of detachment in order to achieve objective of change management. In accordance to research scholars strategic change management actually... From the discussion it is clear that organizations use strategic management to operate business and control functional aspects of various departments while leaders’ use strategic thinking is synthesizing root maps to achieve organizational objectives. Strategic thinking played vital role for change process in P&G.This paper discusses that leaders planning for strategic management need to think out of the box in order to incorporate breakthrough change. Informal learning should be encouraged in order to achieve sustainable change management. Research scholars have found that rearranging older concepts in order to accomplish change management often produces failure due to dynamic nature of strategic management. P&G had successfully used the concept of informal learning to accomplish the required change business model. Senior managers often fail to detect key issues of strategic change management due to various reasons such as complete detachment with employees of the organizatio n, lack of communication with subordinates. P&G had successfully mitigated the probability of detachment in order to achieve objective of change management.  Many organisations have achieved successful strategic change management due to leadership quality. The concept of strategic change management is multi dimensional in terms of organizational impact, variation of objective, dynamics of leadership and other management issues.

Personal Media Inventory Essay Example | Topics and Well Written Essays - 1250 words

Personal Media Inventory - Essay Example As the research declares television images are reproduced on screens which can either be colored or limited to black and white. Televisions have the ability to receive signals and reproduce them on screens. With technology, it is possible to have televisions which can stream media content without relying on the analogue signals used in the past. News and occurrences across the country and beyond are relayed through the television. One can also use a television to watch movies which are informative and entertaining. According to the report findings a newspaper is a printed publication which contains news, advertisements and other information that the producers considers important to reach the readers. Newspapers are better sources of information compared to television since one can keep the newspaper as a reference to a certain piece of information. They are both informative and entertaining. Magazines are closely related to newspapers. However, they are periodical publications which contains articles from various individuals on different topics. Whereas newspapers cover the contemporary issues in the society, magazines are more specific and dwell on a smaller niche of information. They cover a particular topic or area of interest. The internet is a global communication network that allows computers, phones, and other devices to communicate, connect and exchange information. It has taken over the entertainment and information industry considering that most people own cellular phones which can ac cess it.

Is One Child Policy in China Effective Essay Example | Topics and Well Written Essays - 1000 words

Is One Child Policy in China Effective - Essay Example The implementation of the one-child policy saw the light of day early 1980s. This legislation came in to curb the unprecedented population increase that took place a couple of decades before 1980s. Formulation and drafting of the policy had started late 1970s, but the actual implementation took place in 1980 and subsequent years. Even though population increase was getting out of control, it was difficult to get the policy operational. Since the 1980s, one-child policy implementation has been dynamic due to the adoption of some specific changes from time to time.In light of the provisions made in the policy, there are a number of purposes served by the one-child requirement. The ultimate goal of the policy is to control and manage Chinese population. The operational aspects of the policy were designed to reduce births in the country. With reduced births within and across the country, population growth rate would significantly reduce. In other words, the essence of the policy is to re duce fertility levels, discourage couples from having many children, and ultimately reduce the general population in China (Wan, 2012).To achieve the above-mentioned objectives, the policy promotes family planning through use of contraceptives. Government-funded agencies conduct massive awareness and creation and public education on matters of population, social welfare, and economic development. In essence, the purpose of the policy is to enhance the interconnection between the three variables.

Narrative Essay Example | Topics and Well Written Essays - 750 words - 4

Narrative - Essay Example After realization that the world of films is more appealing than I can imagine, I decided to keep the spirit lively by undertaking a Master’s degree in media, my major focus being on Radio and Television studies. When in the university, I got an inordinate chance to train in the first channel of Saudi Arabia, the fifth channel in Saudi Arabia and Institute of Hajj researchers as a photographer, all of which bolstered my understanding of the world of media and communication. I firmly believe that a well-written script and characters are what makes a film, a major reason that made me feel frustrated while in the university when doing photography-related projects. The fundamental reason for the perceived discomfiture was the fact that after doing projects in photography, although they often turned out to be good, I felt left out after the image is completed, a reason that intensified my intention to be a screenwriter so that I can always be part of the complete works such as docu mentaries. When I watch an interesting film, I see myself in it and believe that the ideas on the screen are actually being personified for me, a rare thing that has been developing in me lately. I immediately develop a critical critic of the masterpiece, a factor that has further sharpened my writing skills. However, being in the university was an eye-opener for me. I enjoyed every moment in school primarily because of the many activities that I found myself participating in and the large audience that resoundingly required my presence in various programs, both educational and leisurely. While still working hard on coursework, where I eventually managed a GPA 3.11/4, I could still manage to schedule some time for talk shows, news programs, documentaries, and advertisement. I used my verse skills in media and television presentation to influence and appeal to the audience. The college students always

GE Energy Essay Example | Topics and Well Written Essays - 1750 words

GE Energy - Essay Example Furthermore, the current students are free to select their subjects of specializations depending on individual’s capability, unlike some 10 decades ago when had no choice but to pursue the few offered courses . The traditional colleges specialized in specific subjects, for instance; there were the engineering, law, and medicine and art schools among others (Brian, 2007). However, the modern learning institutions offer both courses but at different departments. All these factors contribute to the adoption of specific careers. Academic researchers have proven that although career selection depends on individuals trainings or education, there are chances of one picking career not related to his/her areas of study. This is because we live in a dynamic world where some skills are not necessarily offered in classes but in the practicing fields. This work is about selection of my two favorite careers. It further explains some of the factors I considered before such selections and the like challenges. 1.1 Water Engineering career Water engineering is one of my favorite careers. A water engineer is required to design and supervise implementations of water related projects like ground water explorations, waster water treatment, water supply and water metering among other responsibilities. One has to perform well in the sciences like Physics, Chemistry and mathematics to get admissions in the engineering colleges or universities. Further aspiring water engineer I have been watching engineering documentaries from YouTube among other sources. I have always admired innovations certain peculiar skills to save my county, country and the world as a whole (Broodly, 2006). My passion to be a water engineer was further triggered after watching some families in the developing nations, more so children perishing or even dying out of hunger. I watched some Christian based non-governmental organizations strive to reduce such sufferings through initiating water projects like bor e hill drilling, construction of watersheds and rain and storm water harvesting among other projects. Since then, I kept reading engineering journals from the local and national libraries. I also used my smart phone to access some online materials touching on the engineering field. 1.2 Environmental consultant My second career choice is an environmental consultant. This implies providing consultancy services to companies, governmental agencies and private projects among other sectors. One requires to have attended environment management courses to qualify or undertake the career. An environmental consultant would conduct environmental impact assessment or audits to starting and ongoing projects respectively. Environment is a very important aspect in the economical development in the society since majority of raw materials in the modern industries depends on the sustainability of the environment. 2.0 Feasibility 2.1 Feasibility inWater engineering career One has to consider certain c urrent issues before the final decision with regard to career selection. Researchers lament that the majority of graduates end up selecting wrong career choices due to

Narrative Essay Example | Topics and Well Written Essays - 750 words - 4

Narrative - Essay Example After realization that the world of films is more appealing than I can imagine, I decided to keep the spirit lively by undertaking a Master’s degree in media, my major focus being on Radio and Television studies. When in the university, I got an inordinate chance to train in the first channel of Saudi Arabia, the fifth channel in Saudi Arabia and Institute of Hajj researchers as a photographer, all of which bolstered my understanding of the world of media and communication. I firmly believe that a well-written script and characters are what makes a film, a major reason that made me feel frustrated while in the university when doing photography-related projects. The fundamental reason for the perceived discomfiture was the fact that after doing projects in photography, although they often turned out to be good, I felt left out after the image is completed, a reason that intensified my intention to be a screenwriter so that I can always be part of the complete works such as docu mentaries. When I watch an interesting film, I see myself in it and believe that the ideas on the screen are actually being personified for me, a rare thing that has been developing in me lately. I immediately develop a critical critic of the masterpiece, a factor that has further sharpened my writing skills. However, being in the university was an eye-opener for me. I enjoyed every moment in school primarily because of the many activities that I found myself participating in and the large audience that resoundingly required my presence in various programs, both educational and leisurely. While still working hard on coursework, where I eventually managed a GPA 3.11/4, I could still manage to schedule some time for talk shows, news programs, documentaries, and advertisement. I used my verse skills in media and television presentation to influence and appeal to the audience. The college students always

Mobile marketing is more effective than e-mail marketing Essay

Mobile marketing is more effective than e-mail marketing - Essay Example The researcher states that this era is known as the era of information technology in view of the fact that the innovations brought by the information technology have not only modernized the ways businesses and individuals carry out their tasks but also improved the living standards. With the emergence of the Internet, the majority of people started using it for email and communication purposes. But soon it was replaced with mobile technology. Now the majority of people use mobile phones to complete their daily tasks. Seeing the increasing interest of people in mobile technology, business marketers have started using it for marketing and promotion of business contents. Mobile marketing is a process through which traditional marketing activities are carried out using a mobile phone. Basically, the mobile marketing is the process of using mobile phones to provide customers with location and time specific, custom-made information, which promotes goods, services, and ideas. However, the q uestion is that in this technology based era how effective is mobile marketing. This paper presents a comparison of mobile and email marketing strategies. The basic purpose of this research is to prove the claim that mobile marketing is more effective than email marketing. According to Roach, the current position and modern characteristics of the mobile technology as a one-to-one communication device define that mobile marketing is evocative of an inventive kind of direct marketing. Up till now many researchers have carried out extensive research to determine the factors which have an effect on consumer acceptance of marketing contents distributed through mobile marketing. In addition, various researchers such as (Barnes and Scornavacca), (Barwise and Strong) and Leppaniemi and Karjaluoto) discuss similar ideas. Additionally, their research is based on three key components: first of all there is a need to see that the user has given their approval to take delivery of marketing conte nts to their mobile phone; the level of authority the service provider maintains throughout the transaction, and the level to which the mobile user has trust on the brand being marketed. In the same way, (TRAPPEY and WOODSIDE) and (Merisavo, Kajalo and Karjaluoto) also discuss the features and elements of the marketing material and distribution. They have discussed various factors driving the consumer's level of acceptability (Merisavo, Kajalo and Karjaluoto) and (TRAPPEY and WOODSIDE). On the other hand, thus far, there has been little research committed to discovering the characteristics of this medium, and whether they have an effect on a customers’ decision to agree to or refuse marketing communications delivered straightforwardly to their mobile phone (Roach). Research Methodology This research will be based on the qualitative research methodology. For this purpose, I will collect data from academic journals, marketing books, newspapers and online promotional material in an attempt to support my research. I will analyze some of basic aspects that demonstrate superiority of mobile marketing methods for business promotion. This research will qualitatively assess some of the major aspects to prove how mobile marketing is more efficient than email marketing. Results and Discussion The one of the major problems with trying to reach customers through email is that the majority of business organizations had already made use of this strategy that it can without doubt be considered as spam by the target customers. In this scenario, mobile advertising and mobile marketing are a brilliant way to reach customers, in particular when business

The Madding Crowd Essay Example for Free

The Madding Crowd Essay The second letter is written by Fanny Robin, a young girl who used to be a maid on Bathshebas farm, but ran away with Frank Troy, a soldier who she intended to marry. The letter was supposed to be given to Gabriel. In it she thanks him for his kindness on the night she left Weatherbury. She also says I am going to be married to the man who has courted me for some time Sergeant Troy and I should be much obliged if you would keep the contents of this letter a secret for the present. I think that she asked for it to be kept as a secret because she knows that Boldwood thinks so little of Troy. This is shown when Gabriel asks him what sort of man Troy is because Boldwood says Im afraid not one to build much hope upon in a case such as this. Gabriel shows Boldwood the letter because he knows that Boldwood cares for Fanny he looked after her when she was little. Fanny obviously feels certain that Troy will marry her whereas Boldwood does not trust her in the slightest and is expecting Troy to let her down. He is disappointed and says Silly girl silly girl. This is because in the letter she seems so happy, and he hates the idea of her getting hurt. Boldwood tries to help Fanny as much as he can. He speaks to Troy because he has an idea which will stop Fanny getting hurt. He says to Troy Marry Fanny. Ill make it worth your while, Ill settle a sum of money upon her, and Ill see that you dont suffer from poverty in the future. He offers Troy five hundred and fifty pounds to marry Fanny. On Bathshebas farm, a crisis occurred, all of her sheep escaped into a clover field and became bloated. The only way that they can be saved is by being lanced in the stomach in a specific place. The only man with the expertise and the equipment to do this is Gabriel, but he had been fired. Bathsheba sends someone to get him, but when the messenger returns Gabriel is not with him. He says he shall not come onless you request en to come civilly and in a proper manner, as comes any ooman begging a favour. Bathsheba then says Shall I beg to someone who has begged to me? This shows that she is stubborn. But her sheep were getting worse by the minute so she wrote a note that said do not desert me, Gabriel and Gabriel arrived. He cured all of the sheep for her, so she swallowed her pride and offered him his job back,. He simply says I will and she smiles. The next letter is the third important letter in the story. It is written by Bathsheba, and sent to Boldwood. She wrote that her final decision was that she could not marry him. This was because she had just met Frank Troy and fallen in love with him. Writing the letter was extremely cowardly because if she was going to turn him down she should at least have the courage to tell him herself, face to face not just leave a message on paper. As if this wasnt bad enough, the next evening Boldwood returned so she deliberately tried to avoid him as to not have to discuss the contents of the note. She apparently didnt realise that she was going to have to face up to Boldwood eventually. She ended up bumping into Boldwood a lot sooner than she could have imagined because that night the two met on Yalbury Hill. We are told that Boldwoods manner was stunned and sluggish so we can safely assume that he has already read the note. Whilst talking to Boldwood, Bathsheba was unsettled because Boldwoods life appeared to be in a mess and she knew that it was all her fault. He says I should have lived in if you had not attracted me by that letter valentine you call it and she obviously regrets sending the valentine because she says I have bitterly repented of it and can you still go on reminding me? She apologises to him for sending the valentine and says she pitys him, but it is too late, she has already hurt him incredibly. He finds it extremely hard to accept that she does not love him, and even though she has told him that she does not love him and will not marry him many times, he still says Say, Bathsheba, that you only wrote that refusal to me in fun and It isnt because you have no feeling in that you dont love me trying to persuade her to change her mind. The final letter in this novel is Gabriels letter of resignation. Bathsheba is at the grave of Fanny and Troy and is very depressed, just as Gabriel comes to see her. He tells her I may soon have to give up the management of your farm, Mrs Troy. The fact is, I am thinking of leaving England. After hearing this Bathsheba crys Leaving England! in surprise and genuine disappointment. This is awful news for Bathsheba who says what shall I do without you? She began to think of Gabriel a lot, and she sincerely wished that he wasnt going to leave. A few weeks later Bathsheba received a formal letter which asks her not to renew his engagement with her She decided to pay Gabriel a visit. She was upset because she thought that the letter meant that he had decided to leave, when what the letter really meant was that he wanted to marry her. The story ends with Bathsheba and Gabriel getting married. Each of the four letters have a major effect on the lives of the characters involved. However a couple of the letters were not the best decisions for the characters to make. For example, the letter that Bathsheba sent Boldwood wasnt really necessary because she shouldnt really have gone so long without making a final decision, and Boldwood should have accepted that she didnt want to marry him. He should also have been told that it was a joke right from the start. In the end it was only to be expected that Bathsheba and Gabriel would get married because he showed an interest in her right from the start, and she must have liked him and respected him because she always turned to him for advice. Paul Liscio Far From The Madding Crowd by Thomas Hardy Y10.

Trauma Radiography And Procedure

Trauma Radiography And Procedure Trauma radiography can be an exciting and challenging environment for the radiographer. However the performing trauma procedure can be intimidating and stressful. The difference depends on how prepared the radiographer is to handle the situation. To reduce the stress associated with trauma radiography, the radiographer must be properly prepared for multitude of responsibilities encountered in the emergency room (ER). Trauma is defined as a sudden, unexpected, dramatic, forceful, or violent event. Trauma ranks as the leading cause of death. The term trauma center signifies a specific level of a emergency medical care as defined by the American College of Surgeons Commission on Trauma. Specialized equipment in trauma. Time is a critical element in the care of a trauma patient. To minimize the time required to acquire diagnostic x-ray images, many emergency rooms have dedicated radiographic equipment located in the department or immediately adjacent to the department. Specialized trauma radiographic systems are available and are designed to provide greater greater flexibility in x-ray tube IR maneuverability. These specialized systems help to minimize the movement of the injured patient while performing imaging procedure. Mobile radiography is widely utilized in the emergency room. Many patients will have injuries that prohibit transfer to a radiographic table, or their condition may be too critical to interrupt treatment. Trauma radiographers must be competent in performing mobile radiography on almost any part of the body and be able to utilize accessory devices like a grids, air-gap technique. Its needed to produce quality mobile images. Positioning aids are necessity in trauma radiography. Sponges, sandbags, and the creative use of tape are often the trauma radiographerà ¢Ã¢â€š ¬Ã¢â€ž ¢s most useful tools. Most trauma patients are unable to hold the required positions as a result of pain or impaired consciousness. Other patients cannot moved into the proper position because to do so would exacerbate their injury. Exposure factors in trauma Patient motion is always a consideration in trauma radiography. The shortest possible exposures time that can be set should be used in every procedure., except when a breathing technique is desired. Unconscious patients are not able to suspend respiration for the exposure. Conscious patients are often in extreme pain and unable to cooperate for the procedure. Radiographic exposure factors compensation may be required when a making exposures through immobilization devices, like a spine board or backboard. Most trauma patient arrive at the hospital with some type of immobilization devices. Pathologic changes should also be considered when setting technical factors. For instance, internal bleeding in the abdominal cavity would absorb a greater amount of radiation than a bowel obstruction. Types on trauma injuries. The some types of trauma injuries is head injuries, spinal injuries, chest injuries, extremity fractures, wounds, burns and also postsurgical complications wound dehiscence. The head injuries is the patients who have to received a blow to the head may have sustained serious injury, even when there are external signs of trauma. Damage may occur with or without a skull fracture. If have bleeding or swelling occurs inside the skull, a rise in intracranial pressure(ICP) may cause seizures, loss of consciousness, or respiratory arrest. incidentally, similar symptoms may also occurs in patients with increased ICP due to brain tumors. The patients with spinal injuries, every trauma patient should be considered to have a potential spinal injury and should be evaluated by the ED physician before being moved. even slight movement of a spinal fracture may cause pressure on the spinal cord, resulting in paralysis or death. for this reasons, exposures should be made without moving the patient whenever possible. when a change of position is required, as for a lateral lumbar radiograph, use a à ¢Ã¢â€š ¬Ã…“log rollingà ¢Ã¢â€š ¬Ã‚  approach, which keeps the body in one plane. this two-person procedure avoids twisting or bending the spine. patients with possible cervical spine fractures are immobilized with cervical collars and other radiolucent devices. About the patient with the chest injuries is the motor vehicle accidents and falls are two of the most common causes of chest injuries seen in the imaging department. Deaths due to crushing or penetrating wounds of the thorax comprise a significant number of the trauma deaths each year. Fractures ribs are painful and can be life threatening if along or blood vessel in punctured. Extremity fractures is a trauma involving the long bones of the body may classified in two categories, first is compound fractures, in which the splintered ends of bone are forced through the skin, and then the second is closed fractures. Compound fractures are usually partially reduced and dressing applied before radiographic examination. Some common types of fractures are greenstick, spiral, overriding, comminuted, transverse, compression, depressed(skull), and avulsion. Fractures may also be classified according to the nature of the injury. there are many ways of temporarily immobilizing extremity fractures. the two legs may be fastened together for stability during transportation, or a stiff object, such as a board or rolled-up magazine, may serve as a splint. When want to position the patients with fractured extremity that is not supported by a splint, maintain gentle traction while supporting and moving the arm or leg. The wounds in the type or trauma is patients with open wounds have usually been treated before you see them in radiology suite. Bleeding has been controlled, and dressings have been applied. the radiographer primary responsibility regarding open wounds is to maintain the dressings and the report promptly any significant amount of fresh bleeding. This is usually considered to be the amount of bright red blood sufficient to soak through a fresh dressing. if a laceration or incision opens, causing severe hemorrhaging, apply direct pressure to the side of bleeding while summoning immediate assistance. While burns in type of trauma is, burn patients may also have traumatic injuries such as fractures. Burns are frequently associated with respiratory complications. Inhalation of hot gases may result in pleural effusion or the development of pneumonia, which must be monitored radiographically. Burns may be categorized by cause of injury, percentage of body surface involved, and depth of tissue destruction. The depth of burns is classified as first, second or third degree. When a burn patient needs a radiograph, coordinate your examination with the nursing staff to ensure that the patient has had pain medication about 30 minute before the procedure. Postsurgical complications(wound dehiscence) is the patient who had a major surgery may require radiographic examination. Wound dehiscence occurs when a suture line parts and the underlying tissues or organs protrude through the opening. While this rare, it may happen, particularly in obese patients who had extensive abdominal surgery. It is possible for evisceration its means loss of organs from a body cavity, it to result when extensive suture lines spread apart or split. Positioning of the patient trauma The primary challenge of the trauma radiographer is to obtain a high quality, diagnostic image on the first attempt when the patient is unable to move into the desired position. To minimize risk of exacerbating the patients condition, the x-ray tube and IR should be positioned, rather than the patient or the part. For examples, position the stretcher adjacent to the vertical Bucky or upright table as often as the patients condition allows. To increases the efficiency, while minimizing patient movement, is to take all of the AP projections of the requested examinations, moving superiorly to inferiorly. Then perform all of the lateral projections of the requested examinations, moving inferiorly to superiorly. This method moves the x-ray tube in the most expeditious manner. Radiographers Role as Part of the Trauma Team The role of the radiographer within the emergency rooms ultimately depends on the department protocol and staffing, as well as the extent of emergency care provided at the facility. Regardless of the size of the facility, the primary responsibilities of a radiographer in an emergency situation include the following , the first is perform quality diagnostic imaging procedures as requested. Then to practice ethical radiation protection , and also provide competent care. It is impossible to rank these responsibilities because they occurs simultaneously, and all are vital to quality care in the emergency rooms. Diagnostic imaging procedures producing a high quality, diagnostic image is one of the more obvious roles of any radiographer. A radiographer in the trauma environment has the added responsibility to perform that task efficiently. Efficiency and productivity are commo0n and practical goals for the radiology department. In the emergency room, efficiency is often crucial to saving the patients life. Diagnostic imaging in the emergency room is paramount to an accurate, timely and often life saving diagnosis. Radiation protection. One of the most essential duties and ethical responsibilities of the trauma radiographer is radiation protection of the patient, the members of the trauma team, and self. In highly critical care situations, members of the trauma team cannot leave the patient while imaging procedure are being performed. The trauma radiographer must ensure the others team members are protected from unnecessary radiation exposures. Common practices should minimally included the following close the collimation to the anatomy of interest to reduce scatter, gonadal shielding for the patients of child bearing age, lead aprons for all personnel that remain in the room, during the procedure, exposure factors that minimize patient dose and scattered radiation and also announcement of impending exposure to allow unnecessary personnel to exit the room. Patient Care As with all imaging procedures, trauma procedures required a patient history. the patient may provide this, if he or she is conscious, or the attending physician may inform you of the injury and the patients status. if the patient is conscious, explain what you are doing in detain in terms the patient can understand. listen to the patient rate and manner of speech, which may provide insight into his or her mental or emotional status. Make eye contact with the patient to provide comfort and reassurance. Keep in mind that a trip to the emergency room is an emotionally stressful event, regardless of the severity of the injuries illness. Radiographers are often responsible for the total care of the trauma patient while performing diagnostic imaging procedures. Therefore it is critical that radiographers constantly assess the patient condition, recognize any signs of decline or distress, and report any change in the status of the patient condition to the attending physician. The trauma radiographer must be well versed in taking vital signs and knowing normal ranges, competent in cardiopulmonary resuscitation (CPR), administration of oxygen, and dealing with all types of medical emergencies. the radiographer must be prepared to perform these procedures when covered by a standing physicians order or as departmental policy allows. Additionally, the radiographer should be familiar with the location and contests of the adult and pediatric crash carts, and understand hoe to use the suctioning devices. Patient Preparation It is important to remember that the patient has endured an emotionally disturbing and distressing event in addition to the physical injuries he or she may have sustained. If the patient conscious, speak calmly and look directly in the patient eyes while explaining that procedures that have been ordered. Do not assume that the patient cannot hear you even if he or she cannot or will not respond. Check the patient thoroughly for items that might cause an artifact on the images. Explain what are you removing from the patient and why. Be sure to place all removed personal effects, especially valuables, in the proper container uses by the facility example like a plastic bags, or in the designated secure area. every facility has a procedure regarding proper storage of a patients personal belongings. Be sure to know the procedure and follow it carefully. Immobilization Device A wide variety of immobilization devices are uses to stabilize injured patients. Standard protocol is to perform radiographic images without removing immobilization devices. Once injuries have been diagnosed or rules out, the attending physician gives the order for immobilization to be removed, changed, or continued. Many procedures necessitate the use of some sort of immobilization to prevent in voluntary and voluntary motion. Prudent use of such is discussed in many patient care textbooks. The key issue in the use of immobilization in trauma is not to exacerbate the patient injury nor increase his or her discomfort. Image Evaluation Ideally, trauma radiographs should be of optimum quality to ensure prompt and accurate diagnosis of the patients injuries. Evaluate images for proper positioning and technique as indicated in the routine projections. Allowance can be made when true right angle projections (AP/PA and also lateral) must be altered as a result of patient condition.

Free King Lear Essays: Comic Relief :: King Lear essays

Comic Relief in King Lear Combining the antics of a circus with the pomp of a royal court is a difficult task indeed. William Shakespeare's genius came from how closely he intertwined the two seemingly mutually exclusive realms to appeal to all socioeconomic groups in his audience. In King Lear, Edgar's appearance as Tom of Bedlam, Lear's insanity, and Lear's Fool provide the comic relief which slices the dramatic tension. Among these, Lear's Fool provides the closest intercourse of the two realms of royalty and tomfoolery while still maintaining their separation. Fools, as I understand them, were kept by kings as entertainment devices prior to the advent of television. Lear's Fool, how-ever, transcends the role as entertainer to assume the role of both Ann Landers and Jim Davis. Particularly intriguing to me are his witticisms and humorous tidbits which interweave foreshadowing, practical advice, humor, and characterization into a succinct, meterical saying. The Fool begins by offering his jester's cap to Kent, saying that if Kent is to follow Lear, he had better have a coxcomb, insinuating the folly of following Lear. He goes on to say that "if I gave my daughters all my property," I'd have to keep a coxcomb. The Fool is quick to juxtapose his comment against his statement that he does not have a "monopoly" on foolishness. The Fool further points out the presence of a "wise man and a fool" without saying who is who, and he criticizes Lear for "going the fools among," implying that Lear is usurping the Fool's position as one prone to lapses of judgment and sheer stupidity. He tacitly insinuates through his actions and statements that he is among the company of fools, which provides the hint of foreshadowing the audience needs to know that Lear is losing his wits. The Fool also uses argument by analogy several times. He first relates Lear to a hedge sparrow which feeds cuckoo babies, which then bit the sparrow's head off. The Fool also relates empty egg shells to Lear and his crown. Shakespeare's unique touch comes in the double meaning of the egg shells. The Fool says that Lear is left with two empty egg shells for a crown, but he also implies that Lear's head is like an empty egg, related most clearly in the comparison of the color of Lear's head to the color of an egg. Free King Lear Essays: Comic Relief :: King Lear essays Comic Relief in King Lear Combining the antics of a circus with the pomp of a royal court is a difficult task indeed. William Shakespeare's genius came from how closely he intertwined the two seemingly mutually exclusive realms to appeal to all socioeconomic groups in his audience. In King Lear, Edgar's appearance as Tom of Bedlam, Lear's insanity, and Lear's Fool provide the comic relief which slices the dramatic tension. Among these, Lear's Fool provides the closest intercourse of the two realms of royalty and tomfoolery while still maintaining their separation. Fools, as I understand them, were kept by kings as entertainment devices prior to the advent of television. Lear's Fool, how-ever, transcends the role as entertainer to assume the role of both Ann Landers and Jim Davis. Particularly intriguing to me are his witticisms and humorous tidbits which interweave foreshadowing, practical advice, humor, and characterization into a succinct, meterical saying. The Fool begins by offering his jester's cap to Kent, saying that if Kent is to follow Lear, he had better have a coxcomb, insinuating the folly of following Lear. He goes on to say that "if I gave my daughters all my property," I'd have to keep a coxcomb. The Fool is quick to juxtapose his comment against his statement that he does not have a "monopoly" on foolishness. The Fool further points out the presence of a "wise man and a fool" without saying who is who, and he criticizes Lear for "going the fools among," implying that Lear is usurping the Fool's position as one prone to lapses of judgment and sheer stupidity. He tacitly insinuates through his actions and statements that he is among the company of fools, which provides the hint of foreshadowing the audience needs to know that Lear is losing his wits. The Fool also uses argument by analogy several times. He first relates Lear to a hedge sparrow which feeds cuckoo babies, which then bit the sparrow's head off. The Fool also relates empty egg shells to Lear and his crown. Shakespeare's unique touch comes in the double meaning of the egg shells. The Fool says that Lear is left with two empty egg shells for a crown, but he also implies that Lear's head is like an empty egg, related most clearly in the comparison of the color of Lear's head to the color of an egg.

The Standardized Testing Debate Essay -- High-Stakes Standardized Testi

Standardized testing is one of the most hotly debated topics in education. Experts in education have different views on the topic. Standardized testing refers to a testing method whereby students are subjected to the same assessment procedures set by examiners that intend to examine and score them as part of a wider student’s body. Standardized tests are of two kinds, the aptitude tests and the achievement tests. The aptitude test examines the students’ advanced skills or competency. Achievement tests evaluate students’ understanding in a formal educational institution and reviews their performance and understanding of key concepts. While evaluating the pros and cons of standard testing, it is evident that researchers and educators question whether it measures how effective the school taught the concepts to the student or whether it asses the students’ comprehension of the basic concepts taught. The articles under review define and explain the pros and co ns but fail to offer an alternative method of assessing students. Standardized testing brings a sense of accountability to both the teachers and the students. According to Derrick Meador, an industry expert, teachers have to deliver effectively in preparing students for the standardized testing. He also states that there is also the advantage of the results of the students going public. This puts pressure on the school as a whole because the results will be a reflection of how much effort they put in their schoolwork. This publicity also ensures that a teachers performance is evaluated and poses the risk of a teacher losing their job or the school being closed and given to the state (Meador, n.d.). Standardized testing makes it possible to create a clear qualitative compar... ...mprehension. Educators must standardize their curriculum however, a standardized universal curriculum does not consider each individual student’s environment. Researchers have show that the student’s comprehension is pegged on their environment. In addition, the pedagogy style employed is also dependent on the environment, which standardized testing does not consider. Works Cited Meador, Derrick . "Standardized Testing."About.com Teaching. N.p., n.d. Web. 23 Mar. 2014. . Popham, W. James. "Why standardized tests don't measure educational quality." Educational Leadership 56 (1999): 8-16. Ravitch, Diane.. "Ravitch: Standardized Testing Undermines Teaching." NPR. NPR, 11 Apr. 2011. Web. 24 Mar. 2014. .

Focus on Trash Island, Save Our Life Essay

Ignored by humans for decades of years, garbage floating on the ocean has become a trash island. The island consists of plastic bags, cans, tires and other plastic debris. The worse thing is that the trash island is still growing. The seawater in the center of Subtropical Airflow of pacific flows extremely slowly, with the addition of weather patterns, a large amount of garbage gather in this place. Year after year, a trash island has formed, which was called â€Å"the eighth continent†. It consists of four million tons of pelagic plastics, chemical sludge, and other debris, researchers estimate island area may be twice the size of Texas! (Wikipedia.com) The floating debris can absorb organic pollutants from seawater, and then such debris can be ingested by small fish, which are then eaten by larger fish. Many of these fish are then consumed by humans, resulting in their ingestion of toxic chemicals. (Ballard 2004). Therefore, human life will be threatened by this situation. What should be done to reduce the amount of pollution and garbage building up on trash islands? It is undeniable we should take this problem seriously; otherwise humans will be faced with disaster. After realized how urgent we should clean the trash island, humans did a lot of work, try to diminish it. Once it was a project called â€Å"Project Kaisei†, which devoted to study the ways of cleaning up the trash island. According to the material, in 2009, Project Kaisei embarked on its first expedition to the Pacific Patch. There are two vessels in this trip, one is the â€Å"Kaisei†, and the other is the â€Å"New Horizon†. Each research vessel had a crew of scientists and volunteers on board in order to research the effects that might be occurring as a result of the large amounts of floating debris in this area of ocean. Investigation was carried out for material science, toxicity, invasive species, ecosystem impact and new catch methods to develop ways for removing some of the debris in the future in a larger scale.(projectkaisei.org). Similar projects are taken; scientists and government are trying to find ways to recycle plastic wastes. Project Kaisei drawn out a plan to save the ocean, which will raise about 200 million dollars in the next 18 month, then it will clean up more than 400,000 tons of garbage; those garbage can be decomposed as fuel. The Kaisei Project indeed got a good return, basically it clean up part of the island, however, the island is still growing because those factories never stop dumping plastic waste into the ocean. Take the real situation into consideration, I think the best strategy we should do is to avoid the island growing bigger. Charles Moore, who firstly found â€Å"the eighth continent†, said even cost all the country’s financial resources, and killed a large number of wildlife, it is impossible to clean up the whole trash island in the Pacific Ocean. (Earth Island Journal, 2010). The technology may not be advanced so much that we can’t clean up the whole island at present; moreover, the costs have far exceeded the benefits. I believe we should develop the technology firstly and seek out the most effective and economical process to recycle and resolve the trash. On the other hand, we can take other actions to prevent more debris from inflowing the ocean. And the costs will be much lower than cleaning the island up. Unquestionably the garbage island is a serious issue that worth to think. Prevention may not solve the problem once for all, but it can avoid it getting worse. And it is practical and workable, has a chance to be enacted. Government can encourage entrepreneur to develop green industry; policy can be carried out to close those factories which had high pollution productive process. Research and development department has the ability to improve technology, as a result, the discharge of pollutant will be reduced and eliminated. Communities can contribute by lobbying companies to find environmentally safe alternatives to plastic and formulate reusable packaging. â€Å"International treaties prohibiting dumping at sea must also be enforced, such as prohibiting sewage from being allowed to flow into the ocean, or eliminating the use of plastic bags†(Silverman, 2007). Factories can find a way to reduce the discharge of plastic waste, or they can stop dumping the wasted into the ocean; there must be approach to resolve the waste rather than simply discard them to the sea. With all efforts, the trash island will not bigger any more. Beyond this, our individual should stop dumping plastic wastes into the sea. As an article said, about 80% of the debris comes from land, much of which is plastic bags, bottles and other consumer products as wind â€Å"blows plastic rubbish out of littered streets and landfills where it gets into rivers and storm drains before riding the tides and currents out to sea† (Grant, 2009). Some tourists always think the ocean is â€Å"a big trash dustbin†, they enjoy the scenery as well as drop the trash unconsciously. Environmental protection advertisement, public announcement and collection can be made to wake up the awareness of environmental protection from human. Although it’s hard to persuade those factories to close down their pollution business, the policies still need to be put into effect. It is indeed the most helpful approach to prevent the trash island grow up. At the national level in the United States, authorities like the Clean Water Act, the Resource Conservation and Recovery Act, and the Pollution Prevention Act of 1990 do not specifically mention marine debris, but include standards applicable to the control of land based sources of marine debris (Interagency 2008). The most important thing is, such management can heighten human’s awareness of protecting environmental, constant dropping wears the stone, I believe it will lead a right direction. If we can change our habits, the trash island will not grow. â€Å"Ultimately more plastic recycling and wider use of biodegradable materials is the best hope for controlling these garbage patches† (McLendon, 2010). Without global effort, we cannot successfully control the situation and protect the ocean environment; marine animals and human’s life will be at risk. Changes and actions need to be made, thus we can fix the problem and prevent it from occurring again. In conclusion, reduction of sources and international collaboration for cleanup is the most efficient way to reduce the expansion of the trash island. Work Cited â€Å"Project Kaisei – Capturing the Plastic Vortex.† Project Kaisei – Capturing the Plastic Vortex. N.p., n.d. Web. 05 Dec. 2012. Ballard, K. ―The importance and conservation of Biomes.â€â€" University of California. (2004) â€Å"Great Pacific Garbage Patch. â€Å"Wikipedia. Wikimedia Foundation . Captain Charles Moore. Earth Island Journal, Aug. 2009. Web. 05 Dec. 2012. Silverman,J.(2007,September 19).Why is the World’s Biggest Land fill in the Pacific Ocean Retrieved February13,2012,from HowStuffWorks: http://science.howstuffworks.com/environmental/earth/oceanography/greatYpacificYgarbageYpatch3.html Grant, R.(2009,April 24).Drowning in plastic: The Great Pacific Garbage Patch is twice the size of France.The’Telegraph . Interagency Report on Marine Debris Sources, Impacts, Strategies and Recommendations. Interagency marine debris coordinating committee (2008) McLendon,R.(2010,February 24).What’is’the’Great’ Pacific’Garbage’Patch? Retrieved February 13, 2012,from Mother Nature Network: http://www.mnn.com/earthYmatters/translatingYuncleYsam/stories/whatYisYtheYgreatYpacificYoceanYgarbageYpatch

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