Retire the NY Stock Exchange
May 1, 2017
It was easy for America to find and punish those responsible for Pearl Harbour; we knew where they lived. It was not so easy to locate the terrorists who attacked America the Twin Towers and the Pentagon on 9/11 because they were spread out in many locations, hiding like the cowards they are among the civilian population.
Had the terrorists chosen to send a plane to Wall Street, the New York Stock Exchange could have been totally destroyed. Ten thousand planes could not take out the NASDAQ, because it exists wherever there is a trader and a computer. I am always amused when a CNBC anchor says, "And now let's go to the NASDAQ Market Site." Many people believe such a place actually exists. In reality, it is nothing more than a wall of colorful monitors in a television studio.
The real NASDAQ is a widely dispersed network of computers and traders in cities all across our nation. Certainly, a terrorist could bomb the offices of the National Association of Securities Dealers, but that would not damage our economy and the world economy in the way that a bomb at the NYSE would. All the experts that trade the NYSE stocks congregate in one building every weekday- an easy target.
The National Association of Securities Dealers' Automated Quotation System (NASDAQ) is just that - a system. It is not a place. Instead of an antiquated system of screaming floor traders and scraps of paper, the NASDAQ is a modern market that exists solely on networked computers.
Of course cyber-terrorism could temporarily halt the NASDAQ, but it would cause only inconvenience; no blood would be shed. And even a temporary shutdown is unlikely because of the redundancy built into the system. The NASDAQ is a system designed for modern times, using modern equipment and technology.
By contrast, the NYSE has changed little since the first traders made deals under a large tree, and on rainy days in a tavern. It is not just the threat of terrorism that argues for the modernization of the oldest stock exchange in America. It is the fact that our markets have outgrown an open outcry auction system. Yes, the NYSE (under great protest and with much dragging of feet) has followed the lead of the NASDAQ with its Super-DOT computerized trading system for smaller trades, while maintaining the old system for large trades. But the NASDAQ has demonstrated that large block trades can also be handled efficiently (and with greater accuracy) on a fully computerized system.
Originally the NASDAQ was an experiment. We now know that it works very well. The only real reason to keep the hopelessly outdated system of floor trading in place is Tradition. In my opinion, faced with the threat of further terrorism and the fact that a superior system is available, Tradition is no longer sufficient reason.
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