Much has been written about information technology and its role in reinventing financial markets. Today’s markets are truly global, and the interconnectedness is the result of information and communication technologies (ICT) providing the necessary infrastructure. A financial crisis in any part of the world can cause widespread disruptions due to this interconnectedness. Clearly, the Asian crisis in the late 1990s, the sub-prime mortgage loan issues in 2006 and 2007, and the problems occurring in Greece and the U.S. “Flash Crash” in 2010 were exacerbated by the ability of technology to allow financial markets to instantaneously respond in a negative fashion.
What is known today as the New York Stock Exchange (NYSE) came into existence in 1792, when a group of 24 men signed the “Buttonwood Agreement” under a Buttonwood Tree which stood just outside where the NYSE now sits on Broad Street in New York City (Wright, 2002, p. 11). Today the Buttonwood tree is still the symbol of the NYSE. In those early days of trading, less seasoned stocks were relegated to being traded in areas by the horses’ hitching post or the curb. These stocks were later morphed into the American Stock Exchange (ASE), which was originally known as the New York Curb Exchange or ‘The Curb’.
Information technology first came to the NYSE during the 19th century, with the arrival of the ticker in 1867 and the installation of the first telephone in 1878 (Mehta, et. al, 2010, pgs. 50-51). The ticker, which became symbolic of Wall Street, was invented by Edward A. Calahan and delivered the latest stock prices to investors removed from Wall Street. The reach of the NYSE had been extended.
The NYSE grew consistently in stature and size throughout the 20th century, but in a controlled fashion. The 20th century also saw the NYSE endure its greatest crisis, the stock market crash of 1929 and the great depression. A major development which grew out of the great depression was The Securities Exchange Act of 1934, which established the Securities Exchange Commission (SEC) to oversee Wall Street, the NYSE and other exchanges. The market did not return to 1929 pre-crash levels until the 1960s.