Finance History | Nasdaq — Quotes Without a Floor, From a Trumbull Computer on 8 February
· 1971-2
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Finance History | Nasdaq — Quotes Without a Floor, From a Trumbull Computer on 8 February
kevin
People treat Nasdaq as the LED cube at 4 Times Square that always listed a software name from an S and P 500 book.
The first book had no floor and no specialist post.
On 8 February 1971 the National Association of Securities Dealers switched on an automated quotation system for over-the-counter stocks.
Bunker Ramo built the machines in Trumbull, Connecticut.
Dealers typed bids and offers onto monochrome terminals instead of telephoning one another for a market.
The system was a quote board, not an exchange.
Trades still closed on the telephone.
What changed was the spread.
A printed pink sheet arrived late and only to the desk that subscribed.
An electronic montage arrived at every Level 2 terminal at once, which made the gap between bid and ask visible to more than the two men on the call.
The Nasdaq Composite was set to 100 that morning.
About 2,500 OTC issues were in the first file.
The National Association of Securities Dealers, later FINRA, ran the network because the SEC had pushed the over-the-counter market to automate after the paperwork crisis of the late 1960s.
Floor exchanges kept their rooms.
Nasdaq kept a data center and a rulebook.
The Times Square MarketSite, the glass studio visitors photograph today, opened decades later, in January 2000, as a broadcast wall rather than a matching engine.
The matching stayed in New Jersey and Connecticut racks.
By the 1980s the quote system had become the listing venue for the microcomputer makers that the Big Board treated as too new.
Microsoft, Intel, Cisco and later Amazon used that tape.
The Composite crossed 5,000 in March 2000 and then lost roughly three-quarters of its value in the next two and a half years.
That drawdown is the record of an electronic market that could mark every name at once.
Nasdaq, Inc. later bought other books, including the Philadelphia Stock Exchange, and listed itself.
The 8 February machine is still the point.
A stock market does not need a room if it can publish a two-sided price to every screen at the same second.
Photo: public view of Times Square, the later MarketSite wall, via Wikimedia Commons.
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