After a hiatus of more than a year, the 130-year-old Cincinnati Stock Exchange is making a comeback.
The exchange, now known as the National Stock Exchange, shut down in May 2014, but a group of Wall Street investors has acquired the exchange with plans to reopen it next month.
It will continue to be known as the National Stock Exchange and is based in Jersey City, N.J., but the legacy that traces most of its history to Cincinnati will be alive again.
The Cincinnati Stock Exchange became a key player in the world of stock trading in the 1970s, when it started the nation’s first all-electronic stock exchange. The Chicago Board Options Exchange took over the exchange in 1991 and moved it out of its offices in the Bartlett Building on Fourth Street in 1995, taking all of its operations to Chicago. It later moved to New Jersey before shutting down.
“We did represent a huge, giant leap in the securities industry,” Nick Niehoff, who was president of the Cincinnati Stock Exchange in the 1970s and 1980s. “The model we had here became the global model. We basically blueprinted it.”
The National Stock Exchange plans to offer changes to the current trading system, such as lower prices for firms that make trades. The company has some well-known Wall Street names behind it, including former Lehman Brothers CEO Dick Fuld, who helped put together the buyout group, according to a Wall Street Journal report. Lou Pastina, a 31-year New York Stock Exchange veteran who ran the trading floor until retiring a year ago, is on the National Stock Exchange’s board.
Mark Sulavka, National Stock Exchange’s chairman and CEO, didn’t return phone calls seeking comment about the company.
“I periodically have conversations with those chaps,” said Niehoff, who recently moved back to Cincinnati. “It is sentimental to me.”
The Cincinnati Stock Exchange was founded in 1885 and operated for decades as a typical exchange back in the day when brokers would go to the trading floor with order slips to trade their clients’ stocks. Nick Niehoff, older brother of former Mercantile Library president Buck Niehoff, ran the exchange in the 1970s and spearheaded the idea to shift to electronic trading. From the mid-1970s into the 1980s, the Cincinnati Stock Exchange was a pioneer in completing stock trades using computers. Niehoff figured that was a lot more efficient than using trading-floor specialists to execute trades by hand. He also started the idea of linking regional exchanges in cities like Boston and Philadelphia so brokers at each exchange would be able to get the best price when trading stocks.
The New York Stock Exchange fought the idea of electronic trading largely because so many people made a living executing manual trades on the exchange floor. But the Cincinnati Stock Exchange’s automated trading system spawned Nasdaq and the current method of trading stocks. Now, the industry processes several billion transactions a day, more than 1,000 per second.
Niehoff left after the CBOE took it over and started the trading and market services division for Nasdaq.
The exchange operated out of Chicago for years and became known as the National Stock Exchange in 2003. It later moved to Jersey City, N.J., and shut down in May 2014 because its trading volume was so low.
The Cincinnati Stock Exchange’s history remains vivid for some veteran Cincinnati investment professionals. Jim Strauss, branch manager at the downtown office of brokerage firm Royal Alliance Associates, recalls visiting the exchange with his father when he was a kid. Brokers sat at a long table with a stock ticker tape machine at one end spitting out price quotes. Women wrote the trades on a huge chalkboard at the front of the trading room.
Researchers at the University of Cincinnati and the Cincinnati Historical Society set up a website dedicated to the Cincinnati Stock Exchange’s role in modernizing trading.
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