COPENHAGEN, Denmark - Traditions of U.S. stock trading are fast eroding this year, but change began many years ago in Europe.
The Copenhagen Stock Exchange is an example. It had its beginnings in the 17th century, when goods from incoming ships were traded on pieces of paper representing debt.
Yet the historic exchange building that I found so impressive when viewed from the city's popular canal boat tour has for years simply been a landmark.
Floor trading with an open outcry system like that of the New York Stock Exchange was abandoned in Copenhagen in 1989 in favor of electronic trading. The exchange merged this year with publicly traded OMX AB, a Swedish electronic exchange that combined the Swedish and Finnish exchanges.
My visits to exchanges throughout Europe have typically consisted of viewing a museumlike trading floor, then looking at a functioning computer room that resembles an insurance office.
The New York Stock Exchange has moved to acquire electronic exchange Archipelago Holdings Inc. and go public as NYSE Group Inc. There is no talk of abandoning the open outcry system, but coexistence between it and the electronic system will be difficult.
The publicly traded Nasdaq stock market's recently announced plans to purchase electronic-trading platform Instinet Group are another example of competitive change.
There is a romance to the traditional trading floor. But prospects of less expensive and faster trading, coupled with the ability to offer more sophisticated products, made change a global imperative. Investors whose vision of trading comes only from television reports and newspaper photographs will see little change. But approval of the plan forwarded by NYSE Chief Executive Officer John A. Thain will signal a new era.
Exchanges here and abroad will merge. The investment apparatus will become more blurred. As traditional structures evaporate, investors will seek the best deal from among exchanges.
That raises antitrust issues and the possibility that having fewer competitors will lead to higher fees. The government will play an increasing role in regulation. The trading profession will change drastically.
Thain is busy selling exchange members and the industry his idea of a publicly traded exchange that is 70 percent owned by NYSE members and Archipelago shareholders.
Whether the trading floor becomes a relic of the past remains to be seen. But we must get accustomed to change in our trading system, especially after recent misdeeds by exchanges and investment companies.
