Securities and Exchange Commission Historical Society

The Institution of Experience: Self-Regulatory Organizations in the Securities Industry, 1792-2010

Rules of the Club


The New York Stock Exchange started out as a private club, a refuge for securities traders vulnerable to popular suspicion of their profession. A long history of economic troubles seemingly fueled by speculation, from the South Sea Bubble in 1720 to Wall Street's first great crash in 1792, left Anglo-Americans deeply skeptical of the financial industry.

After the crash, both Pennsylvania and New York passed legislation restricting securities trading. New York even forbade the enforcement of "time contracts," a promise to sell a particular security at a particular time at a particular price. The state also outlawed open air "public outcry" markets, so New York City brokers went indoors and the seeds of the New York Stock Exchange were planted.1

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(1.) Stuart Banner, Anglo-American Securities Regulation: Cultural and Political Roots, 1690-1860 (Cambridge, UK, 1998), 14-22, 128-30, 172-73.

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