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Competition among the exchanges before the SEC: was the NYSE a natural hegemon?

Published online by Cambridge University Press:  06 March 2013

Eugene N. White
Eugene N. White*
Affiliation:
Rutgers University and NBER
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Abstract

Improved information technology and higher volume should drive orders to be concentrated in one market, lowering the costs of transactions. However, the opposite occurred during the bull market of the 1920s when rapid technological change spawned a flood of new issues. This article employs newly recovered data for 1900-33 on the volume and seat prices of regional exchanges to examine how these rivals successfully competed with the NYSE, leading to its relative decline at the zenith of the market. The history of US exchanges reveals that the tendency towards concentration of trading is periodically reversed when new industries, whose technologies are risky and unfamiliar, are more easily accommodated by existing or new rivals to the dominant exchange.

Keywords

market microstructurestock exchangesseat pricesvolumeorder flow

JEL classification

N21: U.S. • Canada: Pre-1913 G18: Government Policy and Regulation N22: U.S. • Canada: 1913–
Type
Articles
Information
Financial History Review , Volume 20 , Issue 1 , April 2013 , pp. 29 - 48
Copyright
Copyright © European Association for Banking and Financial History e.V. 2013

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