SEC Historical Society

By Christine Parker

For nearly two centuries, brokerdealers in the financial markets charged fixed commissions. Shielded by these price floors, brokerage firms prospered while innovation stagnated. By the 1960s, institutional investors— who had grown from 31 % of public trading volume( shares) in 1963 to 57 % by 1976 on the New York Stock Exchange( NYSE)— began lobbying for reform and routing large blocks of trades to“ third markets” for significantly lower commissions. These market forces challenged the dominance of the NYSE and threatened its member firms’ most

1974 SEC Garrett Commission: A. A. Sommer Jr., Philip A. Loomis Jr., Ray Garrett Jr., John R. Evans and Irving M. Pollack. prized tradition and dependable revenue source: fixed commissions.

Before Mayday, the NYSE collectively set minimum commission rates, which were submitted to the Securities and Exchange Commission( SEC) for approval. All member firms were required to adhere to these supracompetitive rates, thereby limiting price competition across the industry.

Although pressure for reform and radical change intensified, resistance within the NYSE remained strong. This may be partly understood through the lens of prospect theory: the perceived loss of guaranteed income is likely to be felt as more consequential than the uncertain benefits of modernization. For many firms, preserving the status quo outweighed the promise of a more dynamic market.

Yet several visionaries and reformers challenged the old order and sparked a revolution in how Wall Street conducted business before and after May 1, 1975, commonly referred to as“ Mayday,” when fixed-rate commissions were effectively abolished.

Robert W. Haack: The President Who Sounded the Alarm

Appointed president of the NYSE in 1967, Robert Haack— a Navy veteran and seasoned industry professional— stepped into leadership as Wall Street’ s infrastructure neared a breaking point. Trading volumes surged following news of the Vietnam War peace talks and had tripled over four years, triggering what became known as the“ Paperwork Crisis of 1968.” While trading activity expanded rapidly, the Exchange’ s back-office operations remained outdated and overwhelmed,

28 FINANCIAL HISTORY | Summer 2025 | www. MoAF. org