NASDAQ OMX BX

The Boston Stock Exchange was a regional securities exchange based in Boston, Massachusetts, and one of the oldest organized stock exchanges in the United States. Established on October 13, 1834, as the Boston Broker's Board, it was created by a group of local brokers who agreed to meet regularly to compare securities offerings and facilitate transactions. The institution subsequently became known as the Boston Stock Exchange, commonly abbreviated BSE. Its early market reflected the economy of New England and the wider United States, with trading in bank, insurance, textile, mining, canal, railroad and public-debt securities. During the nineteenth century, the exchange helped channel capital into the industrial and transportation development of New England. Securities associated with railroads such as the Boston and Providence, Boston and Lowell, and Boston and Worcester railroads were traded on the exchange. The market also provided an early financing venue for enterprises including American Bell Telephone Company, United Shoe Machinery Corporation, United Fruit Company, Union Pacific Railroad and Calumet and Hecla Mining Company. Membership expanded from the original group of brokers to 36 members in 1844 and 75 in 1855. After a membership boom in the late nineteenth century, the exchange capped membership at 150. The BSE developed from periodic morning and afternoon boards into a continuous trading venue. It held its first continuous session on November 9, 1885. The exchange suspended operations for the first time from June 30 to December 10, 1914, amid the market disruption associated with the beginning of World War I. It continued operating through later periods of economic and technological change, including World War II, when women worked on the trading floor as a consequence of labor shortages. A modernization program in the 1960s changed the exchange's governance by replacing its traditionally unsalaried, elected president with a full-time salaried executive. Regional exchanges also benefited during this period from institutional trading practices such as commission-sharing arrangements. The BSE recorded 67 million shares traded in 1967, but a 1968 Securities and Exchange Commission prohibition on give-ups sharply reduced this source of business. By 1970, annual share volume had fallen to 24.6 million shares. The exchange faced stronger competitive pressure from national markets and electronic trading in the late twentieth century. Computerized trading increased in the early 1990s, while large institutional investors increasingly concentrated activity on the New York Stock Exchange and other larger venues. A proposed 1998 combination with the Cincinnati Stock Exchange did not reach agreement. The BSE nevertheless remained relevant as an alternative venue for Boston-area mutual fund companies and reached a reported peak of 100 million shares traded per day in 2001. In 2002, the BSE co-founded the Boston Options Exchange, or BOX, with the Montreal Exchange and Interactive Brokers. BOX was an automated equity-options marketplace and achieved a significant position in the options market. The options business was separate from the BSE's later sale to Nasdaq. Fidelity Investments and other brokerage firms also backed an electronic stock-trading platform associated with the BSE, but the system handled less than half of one percent of daily U.S. stock trading and was closed in September 2007. Nasdaq agreed to acquire the Boston Stock Exchange on October 2, 2007, for $61 million, consisting of cash and assumed debt. The transaction gave Nasdaq the exchange's clearing capability and other regulatory and operating assets, allowing Nasdaq to clear trades internally rather than rely entirely on an outside provider. The deal did not include the Boston Options Exchange, which was sold separately to the Montreal Exchange later in 2007. Following the acquisition, the Boston office was closed and operations were consolidated in…

The Boston Stock Exchange originated on October 13, 1834, when thirteen Boston-area brokers formed the Boston Broker's Board. The organization provided a regular forum for comparing securities offerings and arranging trades. Early instruments reflected the commercial structure of New England: bank and insurance shares, local mill securities, canal projects, mining ventures and public debt. P. P. Degrand was later credited by financial historians with playing an important role in establishing the exchange. The exchange became a significant regional source of capital during the nineteenth century. It supported securities trading connected with New England railroads, including the Boston and Providence, Boston and Lowell, and Boston and Worcester lines. It also provided an early market for companies and projects associated with telephony, machinery, food distribution, mining and western railroad development. Membership grew from 13 participants to 36 by 1844 and 75 by 1855. A membership limit of 150 was adopted after strong demand during the economic expansion of the late 1870s. In its early operating model, the exchange held separate morning and afternoon boards that adjourned after orders were completed. On November 9, 1885, it introduced a continuous session, marking an important change in market organization. The exchange suspended trading from June 30 through December 10, 1914, in response to the financial instability accompanying the start of World War I. During World War II, women were allowed to work on the exchange floor as page staff because many younger men were unavailable for service or other wartime duties. Governance was modernized in 1965, when the BSE moved from an unsalaried president elected by members to a full-time salaried presidency. Institutional participation helped regional exchanges expand in the 1960s through arrangements in which brokers shared commissions. The BSE recorded 67 million shares of trading volume in 1967, and the cost of a seat rose substantially during the same period. The SEC's 1968 ban on give-ups eliminated an important source of regional-exchange activity, and reported volume fell to 24.6 million shares in 1970. Charles J. Mohr became the exchange's first full-time paid chairman and chief executive in 1981. The BSE then entered a period of mounting structural pressure. Computerized trading improved the competitiveness of Nasdaq and other electronic markets, while large institutions increasingly preferred the liquidity and scale of the New York Stock Exchange. By 1992, the BSE was tied with the Philadelphia Stock Exchange as the smallest U.S. regional exchange by the measure cited in its historical account. A possible merger with the Cincinnati Stock Exchange was discussed in 1998 but failed because the parties could not agree on terms. The BSE continued to serve as an alternative market for mutual fund companies and other participants. Its reported activity reached a peak of 100 million shares per day in 2001. The exchange also diversified into options infrastructure by co-founding the Boston Options Exchange in 2002 with the Montreal Exchange and Interactive Brokers. BOX used an automated model and had captured approximately six percent of the options market by 2005. This options operation was distinct from the BSE's stock-exchange business. The BSE sought to respond to electronic competition by developing its own electronic stock-trading platform, with financial backing from Fidelity Investments and several major brokerage firms. The platform's market share remained below one-half of one percent of daily U.S. stock transactions, and it closed in September 2007. On October 2, 2007, Nasdaq announced an agreement to acquire the Boston Stock Exchange for $61 million. The transaction included the BSE's clearing license, enabling Nasdaq to settle trades conducted on its exchange without paying a separate third-party clearer, as well as other regulatory and operational benefits. The acquisition did not include BOX, which was subsequently sold to the Montreal Exchange. After the sale, the Boston office was closed and the relevant operations were consolidated in New York. The historic BSE therefore ceased to function as an independent Boston regional exchange, while its successor venue became known as NASDAQ BX.

1. 2007Nasdaq acquires the Boston Stock Exchange

   Nasdaq agrees to buy the BSE for $61 million; the transaction later leads to the NASDAQ BX successor venue.

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2. 2002Boston Options Exchange is co-founded

   The BSE joins Montreal Exchange and Interactive Brokers in creating the automated Boston Options Exchange.

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3. 2001Reported trading activity peaks

   The BSE reaches a reported peak of 100 million shares traded per day.

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4. 1998Proposed Cincinnati merger fails

   A proposed combination with the Cincinnati Stock Exchange ends without agreement.

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5. 1981First full-time paid chairman and CEO appointed

   Charles J. Mohr becomes the exchange's first full-time paid chairman and chief executive.

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6. 1968SEC bans give-ups

   The SEC prohibits give-up arrangements, removing an important source of business for regional exchanges.

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7. 1967Trading volume reaches a 1960s record

   The exchange records 67 million shares traded amid increased institutional activity.

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8. 1965Executive governance is modernized

   The BSE adopts a full-time salaried presidency in place of its traditional unsalaried elected president.

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9. 1914Trading is suspended during World War I disruption

   The exchange closes from June 30 to December 10, its first recorded suspension of operations.

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10. 1885Continuous trading begins

    The exchange replaces separate morning and afternoon boards with its first continuous session.

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11. 1855Membership reaches 75

    The exchange reports 75 members as its regional role expands.

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12. 1844Membership expands

    Membership grows from the original 13 brokers to 36.

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13. 1834Boston Broker's Board is founded

    Thirteen Boston brokers establish the organization that later becomes the Boston Stock Exchange.

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A regional American securities exchange that evolved into a Nasdaq-operated electronic trading venue after its 2007 acquisition.

• Boston Stock Exchange equity marketStock exchange1834

  The exchange's principal business was the trading of listed securities, particularly equities connected with New England companies, railroads, industrial enterprises, financial institutions and mining ventures. Over time it operated as a regional alternative to larger national markets and served institutional and mutual-fund participants. Its independent Boston operation ended after Nasdaq acquired the exchange in 2007.

• NASDAQ BXElectronic stock trading venue2007

  NASDAQ BX is the Nasdaq-associated successor brand to the Boston Stock Exchange. It represents an electronic U.S. equity-trading venue operating within Nasdaq's market infrastructure rather than the former stand-alone Boston exchange. The acquisition transferred the BSE's operating and clearing-related capabilities to Nasdaq, and the former Boston office was closed after consolidation.

• Boston Options ExchangeEquity options exchange2002

  BOX was an automated equity-options exchange co-founded in 2002 by the Boston Stock Exchange, Montreal Exchange and Interactive Brokers. It was a separate options business rather than part of the assets acquired by Nasdaq in the BSE transaction. BOX was later sold to the Montreal Exchange.

• 2007Sell the Boston Stock Exchange to NasdaqM&A

  The BSE faced intense competition from Nasdaq, electronic trading systems and larger institutional markets, while its own electronic platform had achieved limited market share.

  What changed. The exchange agreed to be acquired by Nasdaq for $61 million, including $38 million in cash and $23 million in debt.

  Aftermath. Nasdaq obtained the BSE's clearing license and related capabilities. The Boston office was closed, operations were consolidated in New York, and the successor trading venue became associated with NASDAQ BX. The Boston Options Exchange was excluded and sold separately.

  Transaction value. $61 million (2007 acquisition announcement)

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• 2002Co-found the Boston Options ExchangeProduct launch

  The BSE sought to expand beyond traditional regional equity trading and participate in the growth of automated options markets.

  What changed. The BSE partnered with Montreal Exchange and Interactive Brokers to establish BOX.

  Aftermath. BOX became a notable automated options venue and was later separated from the BSE and sold to the Montreal Exchange.

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• 1965Adopt full-time salaried executive leadershipStrategy

  The exchange undertook governance modernization as regional markets adjusted to changing trading and institutional practices.

  What changed. The BSE replaced its traditional unsalaried elected president with a full-time salaried president.

  Aftermath. The change established a more professionalized executive structure and preceded the later appointment of a full-time chairman and CEO.

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• 2007Nasdaq agrees to acquire Boston Stock Exchange

  Nasdaq agreed to purchase the Boston Stock Exchange for $61 million, including cash consideration and assumed debt. The acquisition brought the exchange's clearing license and related operating capabilities into Nasdaq.

  M&A
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• 2007Boston Stock Exchange electronic trading platform closes

  An electronic stock-trading system developed with support from Fidelity Investments and Wall Street brokerage firms was shut down after achieving only a very small share of U.S. daily stock trading.

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• 2007Boston Options Exchange is sold separately

  The Boston Options Exchange, which had been co-founded by the Boston Stock Exchange, Montreal Exchange and Interactive Brokers, was excluded from Nasdaq's acquisition of the BSE and was later sold to the Montreal Exchange.

  M&A
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1. Boston Stock Exchange