Abstract (EN)

I propose a model in which a stock exchange can improve its liquidity by tightening its listing requirements. Because these reduce information asymmetry, they increase the utility of investors and lead to a high investor participation on the exchange. However, the exchange never sets the highest possible level of listing requirements because investors also incur a risk due to more transparency. Their utility is concave in the level of listing requirements. This property determines the optimal decisions of an exchange as well as the social optimum. The level of listing requirements maximizing investor welfare depends on the sensitivity of the utility of investors to changes in liquidity and varies with the organization of listing and trading. A monopolist exchange always under-regulates if regulation is costly. Under- regulation is exacerbated if other trading venues free ride on the regulation and if the trading fee is determined by the level of listing requirements. While investors are better off if trading is separated from listing and is a competitive industry, an exchange has a higher profit when it is a monopolist in listing and trading.