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The End of the Big Board?

Last Wednesday, at 11:32 AM, the New York Stock Exchange computers crashed and trading had to be halted. It was not until 3:10 that afternoon that the NYSE was able to resume trading. In other words, about half the trading day was lost.

The news media went nuts. Having written a couple of books on Wall Street history, I got calls requesting information or interviews from CNN, CNBC, CBS, Fox Business, and MSNBC and spent most of the afternoon and the next morning shuttling between studios.

Wall Street, however, seems not to have cared very much. The New York Stock Exchange used to be the world’s most important stock exchange, utterly dominating the American market, which is why it was known as “the Big Board.” Every major publicly-traded company was listed on it, and their shares traded only on the NYSE. But the SEC forced the NYSE to allow NYSE-listed securities to be traded elsewhere, such as on NASDAQ, reversing a stock exchange rule that dated to 1869. As a result, although the NYSE had 100 percent of the trading on these securities in 1975 and had 80 percent of it ten years ago, today it has only about 20 percent. So when the NYSE went down, trading simply moved elsewhere and volume for the day was nearly normal.

While the New York Stock Exchange still maintains a trading floor, that floor is a shadow of what it was 40 years ago when it was crowded with floor brokers shouting buy and sell bids. Today, the vast majority of stock trades are effected electronically. One has the sense that the Big Board maintains the floor mostly to give TV stock reports a nice backdrop.

Once the heart and soul of American – indeed, world — capitalism, last Wednesday the NYSE showed itself to be nearly an irrelevancy. One can only wonder how long it will be before all the world’s securities exchanges merge into one vast electronic exchange that operates 24 hours a day and the New York Stock Exchange, the London Stock Exchange, the Paris Bourse, and other storied places in the history of capitalism will cease to exist.



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