Arizona Stock Exchange
| Type | Electronically enabled stock exchange |
|---|---|
| Location | Phoenix, Arizona, United States |
| Founded | 1990 as Wunsch Auction Systems in New York City and Minnesota |
The Arizona Stock Exchange (AZX) was an electronically enabled stock exchange for carrying out eTrading after usual stock market hours. It closed in October 2001 due to lack of trading volume.
History
Founding
Founded in 1990[citation needed] as Wunsch Auction Systems,[1] the headquarters of the company was based in New York. It was founded by R. Steven Wunsch,[2] a former Kidder Peabody vice president. The technology trading center was originally based in Minnesota and built and run by a group of former Cray Research Supercomputer technologists that included Christopher Moran, Gray Lorig, Kerry Yndestad and Paul Sustman.[citation needed] Trading commenced on March 30, 1992.[1] The computers were based in Minneapolis, Minnesota, with the office in New York.[2]
Due to the exchange's low trading volume[3] and small size, the Securities and Exchange Commission exempted Wunsch and it from regulations,[2] and it went unregistered.[3] It got off to a "slow start" on Wall Street as a computerized stock trading systems that bypassed "traditional" exchange systems. The company was fought by the New York Stock Exchange.[2] The system was not intended for individual investors, but rather large trader entities. AZX was an electronic auction for online trading of NYSE, AMEX, and NASDAQ stocks for after-hours trades.[3]
As of December 25, 1991, the exchange allowed about 3,100 stocks to be traded during a day, and the system had 56 customers that were institutions.[2] It also had smaller activity than it needed, with Wunsch saying it needed about 24 customers a day placing orders to attract steady business, while it regularly had no more than a dozen customers per day place orders.[2]
Move to Arizona
In June 1991, the governor of Arizona signed legislation for the state to establish a stock exchange. In December 1991, the state of Arizona approved of Wunsch moving his online electronic auction to Phoenix, Arizona from Wall Street and rename it the Arizona Stock Exchange, or AZX.[2] Formerly Wunsch Auction Systems, Inc. it was later operated by AZX, Inc.[1] Arizona received up to $2 million in loans from Arizona, as well as promotion, to serve as incentive for moving to the state. Although Wuncsch asserted that the new exchange was not another regional stock market, Arizona officials said they hoped local small and medium companies would gain exposure. It was said the office in Arizona would become active in February 1992.[2]
Auctions and closure
In April 2001, the SEC granted the Arizona Stock Exchange permission to hold one of its 30-minute live auctions when the markets opened. The exchange auctioned online stocks as though they were antiques or art.[4] Previously, the exchange had only been able to operate on off-hours for a number of reasons, and hadn't been "introduced in a full-form way."[4] Support for the new time slot for the auction came from companies such as Goldman Sachs, J.P. Morgan, Credit Suisse, First Boston and Instinet.[4] The auction's founder and president was Steven Wunsch.[4]
While the idea behind AZX was ahead of its time in the 1990s and anticipated the more successful electronic communication networks such as Archipelago,[citation needed] it closed in October 2001[3] due to lack of volume.[citation needed]
Business model
Restricted to use by large institutional users only, participants could conduct screen based trades of equity and other products through either direct dial-up or internet access. The Arizona Stock Exchange was structured as a proprietary "Single Price" electronic call market. Unique to the Arizona Stock Exchange was the ability to discover the best or "single" price for a stock during the auction based upon supply and demand utilizing both an open book and reserve book of equity orders. Operating under a de minimis exemption, it was not required to be registered or regulated as a stock exchange with the U.S. Securities and Exchange Commission (SEC).[citation needed]
The general philosophy behind the Arizona Stock Exchange was to let natural buyers and sellers of equities trade directly with one another without intermediation by a broker or dealer. The AZX sought to reduce transaction costs for its participants, remove volatility from the market and determine more robust and fair pricing for equities traded.[citation needed]
See also
References
- ^ a b c "International Encyclopedia of the Stock Market, Volume 1". Fitzroy Dearborn Publishers.
- ^ a b c d e f g h "Computerized Stock Trading System Moves to Arizona". Associated Press. December 25, 1991.
- ^ a b c d "Arizona Stock Exchange". Barron's Educational Series. Retrieved May 19, 2018.
- ^ a b c d Balzer, Stephanie (April 20, 2001). "Arizona Stock Exchange given new time slot". Phoenix Business Journal. Phoenix, Arizona. Retrieved May 19, 2018.
External links
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