Competing with the NYSE

55 Pages Posted: 25 Aug 2005

See all articles by William O. Brown

William O. Brown

University of North Carolina (UNC) at Greensboro

J. Harold Mulherin

University of Georgia - Department of Banking and Finance

Marc Weidenmier

Claremont McKenna College - Robert Day School of Economics and Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2006

Abstract

We study the stock exchange rivalry between the New York Stock Exchange (NYSE) and the Consolidated Stock Exchange (Consolidated) from 1885 to 1926. The magnitude of this important, but largely forgotten rivalry was substantial: From 1885 to 1895, the ratio of Consolidated to NYSE volume averaged 40 percent and reached as high as 60 percent. The market share of the Consolidated averaged 23 percent for approximately 40 years. The Consolidated focused on the relatively liquid securities on the NYSE as measured by bid-ask spreads and trading volume. We find that bid-ask spreads fell by more than 10 percent when the Consolidated began to trade NYSE listed securities in 1885. The effect persisted over the entire history of the stock market rivalry. Our results suggest that the NYSE has faced significant long-run competition and may be susceptible to a similar level of competition in the future.

Keywords: stock exchange competition, bid-ask spreads

JEL Classification: G1, G2

Suggested Citation

Brown, William O. and Mulherin, J. Harold and Weidenmier, Marc D., Competing with the NYSE (March 2006). Claremont Colleges Economics Department Paper; AFA 2007 Chicago Meetings Paper. Available at SSRN: https://ssrn.com/abstract=785427 or http://dx.doi.org/10.2139/ssrn.785427

William O. Brown (Contact Author)

University of North Carolina (UNC) at Greensboro ( email )

Bryan School of Business
PO Box 26165
Greensboro, NC 274026165
United States
336-256-0110 (Phone)

J. Harold Mulherin

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States
706-542-3644 (Phone)

Marc D. Weidenmier

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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