The family patriarch was a clipper-ship captain who settled in San Francisco. In the early 1920s, his sons launched a financial enterprise that, over the decades, became the leading champion of the Third Market in the United States – and a major thorn in the side of the New York Stock Exchange. At the firm’s peak, Weeden & Co. sales volume reached 10 to 30 percent of the NYSE volume in certain NYSE-listed stocks, and for some securities Weeden’s buying and selling even exceeded that of the NYSE specialist.
The issue in question is whether a stock exchange is a place or a concept. For the Weedens, automation predetermined the answer. Securities can and should be traded all over the country, unfettered by a particular geographic location or by fixed commissions. With Don, a second-generation Weeden, leading the way, Weeden & Co. became a significant investor in Instinet and developed it own proprietary system, WHAM (Weeden Holding Automated Market System). WHAM became the Regional Market System (RMS) and Multiple Dealer Trading System (MDTS), one of two systems authorized by the U.S. Securities and Exchange Commission to fulfill Congress’ vision of a National Market System.
Don tells how the growing role of the institutional investor changed the way the stocks were bought and sold, and how the NYSE doggedly resisted change (even in the face of Congressional approval for a National Market System) and fought to thwart the influence of off-board market making. He reports on the involvement of congress, the courts, the regulatory agencies and the major players in the financial world at that time. The book is frank, contentious and fully revealing of how self-interest trumps national interest in shaping our financial markets.
Along the way, Don Weeden’s company ran into serious business difficulties, and through merger lost its independence. After some years Weeden & Co. was reconstituted and once again became a growing and prosperous firm, which it remains today.
Still the battle for a National Market System goes on, made more urgent by the potential for terrorist attacks that threaten to destroy any market system not national in structure. And Don Weeden is still its leading advocate.
Weeden & Co. is an insider’s look at how things really work on Wall Street. While it is a vivid history, it sharply intrudes on the present with a message of tremendous significance to our national survival.
About the Author
Donald E. Weeden
On May 1, 1975, commission rates for stocks traded on the New York Stock Exchange were formally deregulated. Until then investing and owning stocks had been for the wealthy and the financial institutions. As the catalyst in this change, Don Weeden, chairman of Weeden & Company in Greenwich, CT, was and remains a force for democracy in the securities markets. For more than 40 years, he has been a virtual one-man lobby for greater market accessibility to make it easier, cheaper and safer to invest in stocks and bonds.
Mr. Weeden was a founder of National Semiconductor Corp. and an early investor in Instinet Corp., Autex, Cadence Design and Quantum Health. His family company was founded in 1922 and became the biggest over-the-counter market maker in NYSE-listed stocks – a development that led to a protracted and still unresolved battle between Mr.Weeden and the New York Stock Exchange.