Profiles of the future The revolution in the securities markets

Abstract

If one of the young gunslingers who manage mutual funds were to do a Rip Van Winkle for about twenty years and then take a walk down Wall Street, he might ffnd the scene as strange as did Rip himself when he came down from the Catskills. This late twentieth century sleeper probably could not find the Stock Exchange in 1990, or at least not recognize it. He would find an unfamiliar scene in the offices of a broker-dealer firm: fewer people, a variety of electronic data processing equipment, and men sitting in front o f cathode ray display screens. He would be struck on all sides by evidence of a revolution in the markets. This revolution has been going on since mid-century, but it has barely begun. The next two decades will almost surely bring about greater change in the structure and operation of the than have all the years of the twentieth century up to 1970. The term securities markets refers to the for trading in o f governmental bodies and corporations that have been publicly distributed. Investors own them, but sometimes they want to sell what they own and buy something else. It is the function of the to do the buying and selling for investors. There are two kinds of markets. One is the organized exchanges, such as the New Y o r k S t o c k Exchange and the American Stock Exchange, which are essentially associations of individuals that provide facilities for trading in and establish rules for trading. among themselves. The other is t he ill-named over-the-counter market, an amorphous group of broker-dealer firms that buy and sell among themselves and with the investing public. The history of the in the United States may be traced back to about the last decade of the eighteenth century. The organized exchanges were formed as private associations with a limited number of members; the over-the-counter