Читать книгу Financial Cold War. A View of Sino-US Relations from the Financial Markets онлайн

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For 183 years, pursuant to the Buttonwood Agreement of 17 May 1792 (so-called after the legendary buttonwood tree outside 68 Wall Street, under which the NYSE was established), brokers of the NYSE set a minimum level for the trading commissions they charged to their clients. By the 1960s, this clubby arrangement was the subject of increasing investor criticism. Moreover, an alternative over-the-counter (OTC) market was emerging as an avenue for investors to avoid paying fixed commissions. A heated debate between the Justice Department, the SEC, the NYSE and Wall Street brokers developed over the issue. However, in 1973, the SEC finally faced down diehard opposition from the brokerage community and initiated the process to put an end to fixed commissions. On 1 May 1975, which came to be known as ‘May Day’ within the industry, commissions for trading shares on the NYSE were finally deregulated.

At first, brokers clung to their previous commission levels. However, over time, competition dramatically reduced the cost of trading on the NYSE as discount brokers like Charles Schwab emerged, charging clients a fixed dollar amount per trade irrespective of the number or value of shares traded. The fall in trading costs contributed to huge growth in trading volumes in the following decades.