The Political Economy of Global Stock Exchange Competition
Summary
Curtis J. Milhaupt and Wolf-Georg Ringe challenge the familiar “race to the bottom” story about stock exchange competition. They argue that IPO rivalry is only one strand of a much larger political-economy picture: exchanges are now commercial firms, major data-and-analytics businesses, competitors with booming private capital markets, and — increasingly — instruments of state policy and geopolitical strategy.
The authors use the Shein listing saga to illustrate the new dynamics: regulatory prestige, activist pressure, and state intervention combined to steer the firm away from New York and London toward Hong Kong. The paper highlights four shifts: listing fees are a small slice of exchange revenues; liquidity, visibility and M&A access still draw firms to US markets; private capital is siphoning activity away from IPOs; and governments treat exchanges as tools of economic sovereignty and policy transmission.
Key Points
- IPOs remain prestigious but generate only a small share of exchange revenues compared with data, analytics and recurring services.
- Demutualisation has turned exchanges into profit-oriented corporations, reducing their reliance on listing fees (e.g. LSE ~3%, NYSE ~10%).
- Many firms list in the US for liquidity, visibility and market access rather than looser regulation.
- Private capital has surged (AUM from $9.7tn in 2012 to >$24tn in 2023), meaning exchanges now compete with private markets as much as with other exchanges.
- States are active stakeholders: exchanges deliver tax revenue, jobs, and help prevent corporate flight; governments encourage home bias through pension and regulatory policy.
- Exchanges have become geopolitical instruments — used for national security, data control, industrial policy and normative enforcement (examples include US–China tensions, EU regulatory export, and national rhetoric in Singapore, India, Israel, Japan).
Context and relevance
This paper reframes how we think about capital-market competition. For policymakers, corporate leaders and investors it shows that listing choices are shaped by commercial economics, private-capital alternatives, and state strategy — not just by a simple regulator-to-regulator race. The findings matter for debates on market fragmentation, financial sovereignty, and cross-border capital flows amid US–China strategic rivalry and the EU’s regulatory ambitions.
Why should I read this?
Because exchanges aren’t just places to float shares any more — they’re money-making platforms, rival markets to private funds, and chess pieces in geopolitics. Read this if you want a quick, sharp reframe of why where a company lists now reflects politics, economics and national strategy as much as investor preference. We’ve done the heavy reading; it’s worth a skim — then dive into the paper if you’re into policy or markets.