Who Governs the Stock Exchange?

by Scott Thompson

    Stock exchanges have existed for hundreds of years, and for most of that time each exchange was self-governing and restricted to a single city or even a single building. More recently, a number of historic stock exchanges have consolidated into larger companies, creating multinational entities governed by a central corporate authority.

    Stock exchanges were originally created through private agreements between brokers selling stocks and bonds. For instance, the famous New York Stock Exchange on Wall Street began in 1792 when 24 brokers met at a buttonwood tree at 68 Wall Street to draft a set of rules for their business. In 1817, the men who traded stocks under the Buttonwood Agreement formed the New York Stock and Exchange Board, which became the New York Stock Exchange or NYSE in 1863. There were always other stock exchanges, including the American Stock Exchange or Amex. In 2006, the NYSE became an electronic exchange. In a series of mergers, the NYSE combined with Amex and with European exchanges such as Euronext, creating NYSE Euronext.

    NYSE Euronext governs several of the world's most powerful stock exchanges, including the 400-year-old Amsterdam stock exchange which is the world's oldest. As of 2012, NYSE Euronext governs the New York and Amsterdam stock exchanges, as well as the Brussels, Lisbon, London and Paris exchanges. Each exchange is also subject to the financial regulations of the country where it is located, and to the regulatory entities in charge of enforcement. In the United States, the Securities and Exchange Commission is responsible for regulating financial markets. However, despite the presence of regulatory bodies such as the SEC, NYSE Euronext and other stock exchange companies are still self-governing.

    While NYSE Euronext governs the New York Stock Exchange and several European exchanges, there are still other stock exchanges both online and in other cities. For instance, the Cincinnati Stock Exchange was founded in 1885, eventually becoming the National Stock Exchange. In 1980, the National Stock Exchange went to an electronic format, and now has offices in Chicago and New Jersey but no physical trading location such as Wall Street. The National Stock Exchange is distinct from NYSE Euronext.

    No one company or organization can be said to govern the stock exchange, because there is more than one stock exchange and each has its own unique set of circumstances. However, the operation of stock exchanges has been undergoing significant changes in recent years. Until 2006, membership in the NYSE was strictly limited, so the organization still functioned something like the private club of brokers who met under a buttonwood tree on Wall Street in the eighteenth century. Now that stock exchanges are becoming public entities, merging across national borders and even doing without the traditional trading floor, the historical self-governing structures of stockbrokers are likely to change considerably.

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    About the Author

    Scott Thompson has been writing professionally since 1990, beginning with the "Pequawket Valley News." He is the author of nine published books on topics such as history, martial arts, poetry and fantasy fiction. His work has also appeared in "Talebones" magazine and the "Strange Pleasures" anthology.

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