The Political Economy of Global Stock Exchange Competition

Conventional academic and media accounts depict global stock exchange competition as a contest of regulatory standards to win initial public offerings (IPOs). This Article re-examines global stock exchange competition through a much broader political economy lens. We make two central arguments. First, competition for IPOs, while highly visible, is subject to important qualifications: IPOs provide only marginal revenues for modern exchanges, most firms are unable to engage in regulatory arbitrage to obtain a high-profile foreign listing, and the public markets are increasingly eclipsed by private capital as a rival source of finance. Second, while the role of nation states has been largely ignored in the literature on stock exchange competition, they have keen economic, policy and geopolitical interests in their domestic exchanges. By moving beyond the “race to the bottom” framework and a narrow focus on IPOs, we show how stock exchanges have become strategic assets in a new era of global competition, calling for sustained scholarly engagement across law, economics, and international relations.