Stock Exchanges Irrelevant Anyway

Salmon: no love for NYSE this Valentine's Day.

February 14, 2011

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30846_bull_marketImagine a market with no opening bell. No more celebrities, athletes and CEOs marking the start to the trading day. With stock exchanges merging across time zones, I guess it’s a possibility. Enter the era of 24/7 trading across borders.

However, according to today’s blog post from Felix Salmon, stock exchanges are irrelevant anyway. Given all the political posturing going on in the wake of the recent TSX-LSX merger announcement, I thought it would be worth sharing it with you – read it below.

I’m sad that my NYT op-ed on the decline of stock exchanges went to press too late to include the bonkers rhetoric emanating from Chuck Schumer:

The New York Stock Exchange is the cradle of American capitalism. It is a national treasure. In America, we start each day in our Congress and in our classrooms with the Pledge of Allegiance, and we also start it with the ringing of the bell on the floor of the stock exchange.

The NYSE is in no sense the cradle of anything. A cradle is a safe place for the young to develop until they grow up and become more self-sufficient. Y Combinator is a cradle. The NYSE is place for algorithms and speculators to make bets on financial assets. It last funneled real amounts of money into the broader economy during the dot-com boom, leaving behind a lot of Aeron chairs and little else. Since then, I get the feeling that the big capital raises on U.S. exchanges have been by financial institutions, rather than the real economy; maybe someone can find a breakdown for me of which sectors raised the most money in primary and secondary offerings over the past ten years.

As for the idea that the NYSE is a national treasure akin to the Pledge of Allegiance, well, yes. Which is to say, its value is symbolic, and rooted in the days of old, when “allegiance” meant something more than who you’re friends with on Facebook, and when institutions were judged on the size and weight of their Corinthian columns.

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