Good Governance in Stock Exchange

Good Governance in Stock Exchange

Introduction

In recent times stock exchange has been contributing towards improving the standard of corporate governance. It has been possible by participating in the developing codes of corporate governance. High standard of governance was maintained by fulfilling the maintenance requirement, setting listing while monitoring it. Exchanges, corporate governance arrangement, and disclosure of listed companies were at the top of the process to raise standards. Such efforts have been used and have been promoting similar notion of these practices that were developed independently.

Discussion

Should a stock exchange enforce some governance standards on the firm listed on the exchange?

I agree with the above given statement. I do believe that a stock exchange should enforce some governance standards on the firm listed on the exchange.

Many public management have now formulated procedures and rules to follow good governance. To excel in the quality, effective governance is one of the most important factors. It is transparent, participatory and accountable (Agere, 2000, p.7).

When the exchange was included and filed with SEC, the rules and policies supervised not only the members but the companies itself which are listed or traded on the exchange. Thus it is demanded by law that the exchange should dictate its own rules and regulation.

When a company files for listing on an exchange , they acknowledge to adhere to the rules and regulation that are laid down  by the exchange. Simultaneously the exchange also has a legal obligation towards the common masses as well as to members that the rules and regulations of the listing companies are being adhered to.

In the prior time stock exchange was limited to the regulatory function. Functions such as assigning rules and resolving the matters of already formed frameworks. Continuing disclosure, issuance of listing, de-listing and maintenance of requirement were the basic role of stock exchange that was practiced. Capital market supervisory agencies are involved with stock exchanges regulatory function on the administration side. After the declaration of corporate governance principle OECD (Christiansen & Koldertsora, 2009 p.4), it allowed stock exchanges to broaden their perspective of regulatory role to adopt more of governance concerns. It has benefitted to the improvement in corporate governance application and recommendation to the listed companies.

In extension to being the lead of progress of governance codes and recommendations few exchanges have to be keenly connected with raising the knowledge about the worth of capable corporate governance (Christiansen & Koldertsora, 2009 p.11). For example, The Warssaw Stock Exchange in 2008 came to a decision to form a team of educational partners from all over the country to co organize the training sessions and provide guidance in other education projects as well. This increases the awareness of the practices of good governance.

Due to competition, exchanges have started investing in their regulatory capacity. It has become their uniqueness or core competencies. A review was conducted by IOSCO (Christiansen & Koldertsora 2009 p.15) of many exchanges and the result was that importance of regulatory system has increased immensely. Introduction different mechanisms so that conflicting issues ...