There is an image from the past that persists: just before 10 AM, the big room at 11 Wall Street hums, brokers and traders gather at their posts, and along the side walls telephone clerks jot down orders. A bell rings exactly on the hour, and as one account from the 1920s put it: “The market has opened! Instantly a roar of voices rises as the brokers rush into the “crowds” around the various posts and back to their telephone stalls.”1 The totality of the U.S. securities market structure was always much more of course; rituals and rules, participants who were not on the floor, and other institutions—even other exchanges—that enabled the buying and selling of securities. But there was a time when, for nearly all Americans, the expression “market structure” summoned up this image of the New York Stock Exchange (NYSE).
In this gallery covering the transformation and regulation of equities market structure, therefore, it is appropriate to start from the NYSE and work our way out, for despite the innovations in organization and technology that came from other institutions, and the regulatory arrangements that facilitated the reshaping of the markets, for most of the period under discussion, much revolved around the NYSE floor. This gallery shows how market forces and regulators encouraged reexamination of the structure of the mid-20th century exchange and over-the-counter (OTC) markets. It documents how and why market participants automated the exchanges, and how innovators and regulators ultimately disrupted and then attempted to integrate the larger market. Finally, it takes a look at the market that remained when the floor was diminished, a market that was largely invisible, complex, and remarkably fast. The Securities and Exchange Commission employs a number of tools to oversee, regulate, and reform market structure, including oversight and approval of exchange rules, inspections, and enforcement actions. This gallery, however, focuses primarily on rulemaking by the Commission, and particularly on those rules which have served as landmarks in nearly a century of market structure evolution.
(1) J. Edward Meeker, The Work of the Stock Exchange, 2nd (New York, 1930), 80.
