3c hapter - Index of

Back to the Future 201
traded companies, began to bleed business away from the regional
exchanges. The powerful and politically connected New York Stock
Exchange was a key benefi ciary. As a Time magazine article from 1936
explained: “Because a listing on a small exchange requires the same
painful revelations as on the New York Stock Exchange, corporations
tended to seek listing there in addition to a listing on a local market.
When that happens local trading generally begins to dry up.” 4
The migration to bigger exchanges accelerated with the
advent of communications technology that could link the markets.
As physical place became less important, the exchanges began to
consolidate. The Cleveland, St. Louis, Minneapolis–St. Paul, and
New Orleans stock exchanges combined with the Chicago Stock
Exchange, which continues today. Others simply folded. The
Standard Stock Exchange of Spokane, a mining- heavy market with
a colorful, if checkered, history, was among the last of the regionals
to close, in 1991.
Today, most public trading takes place on the New York Stock
Exchange and NASDAQ. As exchanges go, NASDAQ is a newcomer.
A tech- savvy upstart, it became the preferred market for
small- cap tech startups like Apple and Microsoft beginning in the
1980s. In recent years, it acquired the Philadelphia and Boston
stock exchanges before merging with the Nordic OMX exchange.
Today, the NASDAQ OMX Group’s services span six continents.
The venerable NYSE scrambled to catch up. Starting in 2006, the
“Big Board” in quick succession swallowed up Archipelago, an
electronic trading network that owned the Pacifi c Stock Exchange,
the pan- European Euronext, and the century- and-a- half- old
American Stock Exchange. And in early 2011, the NYSE agreed
to be acquired by the Deutsche Börse, which runs the Frankfurt
Stock Exchange. As if to eliminate any remaining ties to place, the
combined entity would be headquartered in the Netherlands.
The merging of exchanges was a natural evolution that
increased transparency and effi ciency and lowered costs. But it
would also change the nature of the markets in far- reaching ways.
As the exchanges consolidated their power and reach, they jettisoned
their not- for- profi t status and became publicly traded companies
themselves, selling shares to fuel their expansion. Over