Later, the shares are listed on the stock exchange itself, and the funds got by selling the shares will be distributed among the members of the exchange as payment for their seats. If the company is not being listed, the shares may be offered to the members, not for transfer. A corporate structure, which is the goal of demutualisation, provides the management with more flexibility. A company is more nimble and can react faster to changes in the environment as compared to an organisation that is mutually-owned by members who are worried about themselves. But, the BSE, which is mutually-owned was unable to hive off its clearing house into a separate subsidiary.
Exchanges require large investments in infrastructure to keep pace.
But, the trouble is that their decision-making is often painfully slow and conservative. This is seen from the reluctance of smaller, regional exchanges in India to merge with the larger exchanges just so that they retain their individual character. This, despite the fact that many have no trades in a whole year. Internationally too, it was seen that the members of London's International Petroleum Exchange had voted against demutualising, and had rebuffed an overture for a merger from the New York Mercantile Exchange. The taxation aspect is a major deterrent for many stock exchanges to demutualise.