By: Lou Pastina
Contributions by: Dan Labovitz, Jim Buckley and Charles Dolan
I retired from the New York Stock Exchange in October of 2014, but apparently old habits – particularly commuting to Wall Street for work – die hard. I know this because ten years later I was once again cleaning out an office on Broad Street to prepare for another change in life.
After 31 years at the NYSE, I joined former colleagues from the NYSE to form Global Markets Advisory Group (GMAG), a boutique consulting firm focused on regulation, markets and technology. Our small bespoke firm has gone through many changes over the ten years, but our partnership was founded on trust and long years of friendship and respect for each other. Operating out of rental offices on Broad Street, our work has brought us major technology clients like Amazon, Google, Microsoft and IBM. It has brought us start-ups like the Long-Term Stock Exchange and the Investors’ Exchange, in addition to traditional firms like the Toronto Stock Exchange and even faraway places like the Nigerian Stock Exchange. We have advised law firms, alternative trading systems, broker-dealers, Exchanges, and various other players in the equity market space. While fewer than half of professional services firms last more than 5 years, ours has survived twice that; indeed, last year was our most profitable ever.
We started out in a small office in New Jersey. The phone number was once the number for a cleaning service, and people would call asking if we could clean their house. The beginning days were tough, so we considered taking a few cleaning jobs. We joked that if someone asked us if we did dental work, the answer was “yes” and we’d figure out how to get it done. But then we hit our stride, moved to New York into a WeWork space and began to make a difference. When COVID hit, we went virtual, like everyone else, and managed to thrive. We moved to a nearby office space after the pandemic, maintaining our Wall Street presence out of habit as much as anything else. Recently, however, we decided it was time to move again.
As I walked to our office today with the intention of cleaning out old files before the move, I realized that Wall Street had changed drastically from when I started at the NYSE in 1983. At that time, most brokerage firms were located within walking distance of the Exchange. The Exchange itself was a beehive of activity with over 3500 traders, clerks and staff on the five adjacent trading floors screaming and yelling at each other. The streets were populated with these characters wearing different colored jackets and all had lanyards with name tags. The days began early in the morning and often ended late at local watering holes where bankers and brokers planned strategies, entertained clients – and sometimes drowned their losses. After hours, the streets were deserted, with only the car service companies waiting outside the major underwriting firms whose employees often worked all night long on deals.
Most of those firms are gone now. As the years wore on, they began to migrate uptown to fancy office towers in midtown. Technology allowed firms to stay in contact with the trading floors, but to be more centrally located within the city. Executives living in the surrounding suburbs preferred offices nearer to Grand Central or Penn Station than all the way down on Wall Street. Some even moved to New Jersey.
Technology also pushed the envelope as to how far away Wall Street’s infrastructure could be from Wall Street itself. When 9/11 hit, it became obvious that having an Exchange with a 90% market share of equity trading volume physically convened in one place was not strategically ideal for the nation, a conclusion that was reinforced later by Hurricane Sandy, and later still, by the pandemic that briefly caused the NYSE to close its iconic trading floor even though the market continued to operate. Change was in the air. Technology also enabled newer competitors, and this competition led to major changes to Wall Street – how it trades, how information flows, and where the center of it all really lay. The streets of Broad, Exchange, New, and Broadway would never be the same.
Today those streets are populated not by traders in brightly colored jackets, but by tourists and urbanites making it their homes, as offices converted to Condos, storefronts became schools, restaurants and markets moved in. Wall Street is still a force, but it’s now mostly a place in name only. The street has moved away from its roots and now intersects squarely with Main Street. Firms like Robinhood and Schwab highlight the democratization of the market on one hand, while major wholesalers like Citadel and Virtu highlight the unique nature of US market structure today. Old names still persist — firms like Morgan Stanley and Goldman Sachs are still with us, but names like Salomon Brothers, Drexel Burnham, Kidder Peabody, EF Hutton, Bear Stearns, and Lehman are now all but forgotten. Thanks to the repeal of the Glass-Steagall Act, major banks play a larger role today than they used to. As a result, JP Morgan, Bank of America, Citibank are larger on the landscape.
At long last, GMAG will now make the move to Midtown too, joining the exodus from what was once known as the financial center of the world. We may not be quite ready for Hudson Yards, but you will find us just across from Grand Central on Park Avenue. But even from a new home in Midtown, we’ll still be focused on helping firms bridge the gaps between regulation and technology.
The move is not without some melancholy. As I left the office on Broad Street I walked past my old employer at the corner of Wall Street. Within the gated area in front of the Exchange, I spotted an old friend posting a live video to the world about the state of the market that day. His white hair and beard flying in the wind, his arms windmilling about, the self-proclaimed Einstein of Wall Street was explaining what was happening in the market. A turn on to Wall Street up to Broadway brought me to a crowd of students standing in front of a stanchion. Atop the stanchion was another familiar figure from my old days, a very famous Georgetown professor lecturing his class on the value and role of high-speed traders. I moved through the crowd and raised my hand to ask a question, which the professor, not recognizing me, answered patiently. I smiled as I walked away realizing he didn’t remember me. We had spent much time together in the past. I continued my walk on Broadway, past George Washington’s former residence and past the spot where it is rumored that Alexander Hamilton and Thomas Jefferson made a deal for the US to have its own bank based in New York, in exchange for moving the Capital from New York to Philadelphia and finally to Washington D.C., closer to Jefferson’s home. I learned that from Arthur Cashin, a true wizard of Wall Street, who worked as a broker on the trading floor for decades and was a commentator on CNBC for years. Arthur had great histories of New York, the NYSE and how our country and markets started. I realized I missed him and the old Wall Street a lot more than I thought.
Files firmly in hand, I headed uptown for the next chapter. It was time for the next decade of work. My colleagues have also been getting ready to do the same thing, clearing out the office. Happily, the four partners have been involved with a special client the last two years: ourselves. After hearing from clients who were thinking about how to blend capital markets and sustainability, my partners Charlie Dolan, Dan Labovitz and Jim Buckley realized that an exchange could be an effective tool for that. What’s more, we knew that after advising clients on how to start exchanges and ATSs, we were uniquely positioned to build an Exchange of our own. This led us to form the Green Impact Exchange (GIX), a new registered national securities exchange that would have a focus on doing good by encouraging the world’s companies to be “green”. None of us are environmental scientists, but what we do know is markets and how – with the right information and incentives – they can direct capital where it’s needed most. We also all share the hope that what we’re doing will help make the world a better place for our children and grandchildren.
It’s quite a long way from the Wall Street of old; quite a random walk indeed. We hope to see you on the road.
Global Markets Advisory Group
250 Park Avenue, NY, NY 10177