Chicago to Launch New Stock Exchange
James L. Tyson, writer of The Christian Science Monitor, The Christian Science Monitor
THE Chicago Stock Exchange plans to parry the one-two punch of technology and price competition by launching later this year what it calls a state-of-the-art stock market.
The new market -- the United States Stock Exchange -- would not have a trading floor but would execute trades electronically. If approved by the Securities and Exchange Commission (SEC), the exchange will begin trading sometime in the second half of 1995, says Chicago Stock Exchange spokeswoman Tracy Galla.
The new market is an attempt by the Chicago Stock Exchange to compete against securities firms that execute stock trades themselves electronically in what is called the "third market" outside traditional exchanges and their trading floors. The third market is a fast-growing rival to traditional stock exchanges, say finance experts.
The US Stock Exchange is controversial because it will operate in a gray area between traditional stock exchanges and the steadily growing third market. The SEC plans to review the proposed exchange next month, said a Chicago Stock Exchange executive, who requested anonymity.
In broad terms, the plan for the new exchange shows that, with the volume of securities trading steadily rising, markets have become increasingly complex and competitive.
"Competition is driving the launch of the exchange. This is a huge business, and it is getting bigger as markets in other parts of the world become more developed and more liquid," says Michael Fishman, a professor of finance at the J.L. Kellogg Graduate School of Management at Northwestern University in Evanston, Ill.
The Chicago Stock Exchange says the proposed market would combine the convenience and efficiency of an electronic market with the safeguards of a traditional stock exchange. …