The PCX and its forerunner, the San Francisco Stock and Bond Exchange, have operated a trading floor for stocks and bonds in the city since 1882. The floor has been housed in the "Temple of Capitalism" at 301 Pine Street since 1930, but advances in technology have eliminated the Pacific's need for centralized, physical facilities to make markets in equity issues.
"While the closure of our equities trading floor marks the end of an era, the Archipelago Exchange is the beginning of a bold new one," said Philip D. DeFeo, PCX Chairman and CEO.
"Currently, 95 percent of our equities trades are handled electronically. Given technology's advances, we decided that the Exchange and its members would be better served in a fully electronic environment, one that provides traders the ability to access the market from any location in the world, one that eliminates the cost and inefficiency of unneeded real estate. We found the ideal solution with Archipelago."
Archipelago currently operates as an electronic communications network (ECN) that trades listed and Nasdaq stocks. On October 25, 2001, the SEC approved a proposal to make the Archipelago Exchange a regulated facility of the PCX. When ArcaEx replaces the PCX equities platform on Friday, March 22, it will initially trade 27 issues that are exclusively listed on the Pacific Exchange. Investors can continue to access and trade all other listed stocks and Nasdaq securities on the ECN, as they do today. At no time will the same stock be traded on both ArcaEx and the ECN trading system.
The ArcaEx roster will be expanded to include listed stocks from the American and New York stock exchanges over a matter of weeks. Nasdaq issues are scheduled to be added to ArcaEx by the end of the year.
"ArcaEx is an enormous advance in the market's evolution," continued DeFeo. "It's completely open and transparent. It's fast, fair, and efficient. We believe ArcaEx will fundamentally change stock trading, and all to the benefit of the investing public."
The Exchange closed its Los Angeles equities floor on May 25, 2001, in preparation for the launch of ArcaEx. The PCX options floor in San Francisco is unaffected by the migration of equities trading to an electronic environment. The Pacific Exchange was formed by the merger of the San Francisco Stock and Bond Exchange (founded in 1882) and the Los Angeles Stock and Oil Exchange (founded in 1899) in 1957. It began trading stock options in 1976, and is among the world's leading derivatives markets. The PCX has been a leading source of technological innovation for U.S. exchanges throughout its history.
