"Looking at Wall Street and our securities industry today, I see an industry which has served this nation well for raising long-term debt and equity capital but I do not see a modern, profitable, efficient, competitive system for trading securities.
- October 22, 1974 "Will Wall Street Come Tumbling Down?" – Address by SEC Commissioner John R. Evans to "Money Marketeers"
The decline of Nixon's Presidency coincided with a new and rising sense of power in Congress. Not content to let the SEC dominate market regulation, Congress began to examine issues and draft legislation on its own that would command substantial changes in the structure and operation of the equity markets.(22)
As the SEC studied the abolition of fixed commission rates which benefited the big, institutional investors, Congress began drafting legislation to end fixed commission rates, restrict transactions by broker-dealers off the floor in listed exchanges, and allow the SEC to abolish third market operations to protect the viability of the exchange auction markets.(23)
In March 1974, the Senate adopted a bill which called for a common tape and quotation system and the integration of all securities markets into a centralized system. While the Senate Banking Committee took no action authorizing the SEC to eliminate trading in the over-the-counter, or third markets, committee Chairman Senator Harrison A. Williams Jr., (D-NJ) indicated that the bill pointed "the way toward the most major reforms ever undertaken in the basic structure of our securities markets."(24)
The New York Stock Exchange, led by President James Needham, expressed the concern of its members toward new regulation which it believed would substantially harm the profitability of member firms.(25) The exchange appealed a ruling by the SEC which limited member discounts to broker-managers of large institutional investors on stock transactions. The NYSE had contended that pending legislation by Congress, which differed in some respect from the SEC regulation, would suffice to address the issue, but the SEC rejected their appeal.(26)
(22) Felix Belair, Jr., "Broad Securities Reform is Approved by Congress," The New York Times, May 23, 1975, 49
(23) U.S. Assails Bill to Let S.E.C. Restrict Trading to Exchanges, The New York Times, Feb. 24, 1974, 53
(24) Senate Unit Adopts Bill for Integrated Market System, The New York Times, March 6, 1974, 47
(25) E.W. Kentworthy, "Needham Warns That Rules Changes Peril Exchanges," The New York Times, October 23, 1975, 57
(26) Richard Phalon, "S.E.C. May Soon Free Brokers of Restrictive Rule 394," The New York Times, November 28, 1975, 59
