Red October: its Origins, Consequences, and the Need to Revive the National Market System

Abstract:     
This article discusses the problem of the lack of liquidity as an aspect of the 1987 stock market crash and the reforms adopted in the wake of the crash to address the problem. The author advocates a comprehensive revision of the securities market through the National Market System to effect consolidation of the equity markets. Consolidation, he argues, would dramatically increase market liquidity and minimize the possibility of a second crash. Consolidation, however, requires radical restructuring of the markets' regulation to end the fragmentation that now exists. This can only be accomplished by motivating the SEC to embrace the National Market System, centralizing market regulation in the SEC, and ending self-regulation.

Accepted Paper Series