Wall Street's minders had been predicting the imminent demise of the New York Stock Exchange as the world's premier securities market long before the SEC abolished fixed commission rates in 1975. Nearly two decades after this convulsive event, the dire forecasts have begun to come true—as the thoughtful, objective audit at hand attests. With help from Rottenberg (coauthor of Main Line Wasp, 1990), Wharton finance professors Blume and Siegel offer an accessible status report on a long-lived institution in at least partial eclipse. Drawing on NYSE archives and other sources, they first review the history of finance in the US. Getting down to business, the threesome tracks the Big Board's ascent through the go-go 60's, as well as its subsequent decline (as measured, for example, by its share of trading volume). They attribute the slide of the exchange (which turns 201 this year) to, among other causes, the development of alternative markets with cheaper, more efficient computer-based transaction systems; government regulation, which has impaired the NYSE's capacity to respond to threats from upstart rivals (or economic upheavals); the bureaucratic gridlock that can result from a brokerage-community membership with variant need; and the influential dominance of cost-conscious institutional fiduciaries rather than individual investors. Covered as well are the emergence of regional exchanges, offshore competitors, futures markets, and so-called derivatives that afford risk-averse money managers a means to pursue profit without actually committing to debt or equity issues. The authors stop short of specific prescriptions to ensure the survival of the NYSE and its valuable infrastructure, but they conclude that it still has a useful role to play as a servant, if not the master, of a widening world's increasingly interdependent economy. A perceptive, unsparing analysis of a colossus in crisis.
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