New York Stock Exchange archivist Pete Asch joined TheStreet to discuss how one man's broken leg in the 1870's forever transformed the way the NYSE operates.
Full Video Transcript Below:
PETE ASCH: The Wall Street story. The story we had is that there was a trader named last name's Boyd, and his first name lost to history, who actually broke his leg in 1875. And so, you know, bad luck for him, great luck for our market model, because when he was recovering from his broken leg, what he did is that he actually ended up sitting next to the Western Union trading post. And so what we had at that point is while we didn't have an organized people trading the market, each stock had a specific place on the floor they traded. And so he did, as you know, as you would with a broken leg, you don't want to run around a trading floor. So he leans against this post and all of a sudden people realize, wait a minute, this guy knows more about Western Union than anyone else on the trading floor. This guy has the ability to know where the buyers are, where the sellers are, and so they refer to him as a specialist.
And that's a term that's occasionally still used on Wall Street today. And so by the end of the 1870s, because of this leg break in 1875, every security on the New York Stock Exchange had a self-appointed market maker. Behind us on the trading floor today, it's done a little differently with technology. Every single listed company has a market maker still doing what Boyd did back in 1875, standing at the point of sale, representing the security right on the floor of the New York Stock Exchange.
J.D. DURKIN: That's an incredible story. That's I mean, I mean and I feel like that's got to be one of your favorites, right? Because we've talked about it before and it's just so unique.
PETE ASCH: It's so unique and it's so unique in that it shows kind of how the accidental history really can evolve. Because since 1875, what it means is that our market model has depended on this idea, this concept. This building opened in 1903 with the idea that you would have people in the center of the room at the point of sale brokers on the outside of the room bring them in. That's why we're on the edge of the floor and the market makers are behind us. It's why we continue to have a physical trading floor to provide that market model. And it's really what makes us different than every other exchange. And it's because someone, you know, broke a leg in 1875.
