Mumbai: The National Stock Exchange (NSE), the world’s biggest bourse by equity-derivative trading volumes, has got regulatory approval for listing its shares, putting the spotlight on public trading in the stock of financial-exchange operators that are central to efficient capital flows. The NSE initial public offering (IPO), likely raising up to Rs 31,500 crore in India’s second-biggest announced share sale, could make the institution-owned bourse among the top exchange operators globally by market value when its stock begins trading on the erstwhile broker-led Bombay Stock Exchange (BSE).

The BSE, Asia’s oldest bourse, was the first Indian exchange to list its stock early 2017. ET BureauQuest for efficiency, the very reason for the existence of trading floors, quickened public listing by stock-exchange operators that otherwise ran as exclusive, member-led ‘mutual’ associations for centuries in Europe and the US.

Three decades ago, a phased introduction of electronic trading platforms, which replaced physical trading floors and made state frontiers redundant, forced a capital restructuring exercise described formally as ‘demutualisation’ of stock exchanges. Demutualisation was the first step in broadbasing ownership of broker-led financial exchanges through the formation of common-stock companies.

An eventual listing followed of these stock-exchange owners – from Tokyo to New York – over the first two decades of this millennium. The NSE is perhaps the only major institution-owned exchange operator that remains unlisted to date.

Others that remain so are generally state owned. The Australian exchange owner remains the first company in the world to list its own stock for trading on October 14, 1998.

What's demutualisation? It’s a process that replaces the ownership of an entity – in this case a financial exchange operator - from a ‘mutually agreed upon’ association to a company structure with a specified equity share capital.

Demutualisation, its backers said, builds an efficient structure that immediately creates liquidity – if the securities are listed – and provides the much-needed currency that allows merger, acquisitions, carveouts, spin-offs, and other corporate outcomes considered difficult for a ‘mutual’ association to achieve. Read more: MCX electricity futures clock record Rs 245 crore turn over as OI touches all-time highWhere did 'demutualisation' begin?

Curiously, Wall Street was a relative straggler because technology alone couldn't pose an immediate credible threat to its vast, captive domestic market. By contrast, smaller Nordic markets - Sweden, Denmark, Finland, for instance - faced an immediate existential threat as automation moved a large part of regional stock trade to London as early as late 1980s.