Now defunct in name, Pacific Exchange – PCX was one of four U.S. exchanges to trade equity options and the first to develop and implement an electronic trading system. At one time, the PCX had operations in both Los Angeles and San Francisco, but both closed in early 2000 when the PCX partnered with the Archipelago Exchange (ArcaEx), which later merged with the New York Stock Exchange. Consequently, PCX transactions are now conducted on the NYSE Arca platform. Besides providing regulatory services to ArcaEx, the PCX continues to run its options business. But it has also embraced the idea of a hybrid model. To that effect, it launched PCX Plus, which allows options market-makers to make trades—either from its floor or from remote locations.
BREAKING DOWN Pacific Exchange - PCX
PCX was originally formed in San Francisco in 1882 as the "Stock and Bond Exchange", which was utilized by both institutional and individual investors alike. Its original purpose was to facilitate stock trades associated with large amounts of silver found in Nevada, after a silver rich area known as the Comstock Lode sparked a frenzied silver rush. Many men became millionaires off of the Comstock Lode discovery, including a foursome known as "Bonanza Kings," comprising James Graham Fair, John William Mackay, William S. O'Brien and James Claire Flood, for whom San Francisco's iconic Flood Building on Market Street is named.
The exchange was officially renamed “PCX” in 1957, when the San Francisco and Los Angeles stock exchanges merged. For years, the PCX was a mainstay in San Francisco's financial district, but its open outcry system of trading became archaic with the advent of computers and electronic trading. It ceased operations in 2005. But before it shuttered its doors as PCX, the exchange witnessed robust trading activity. And by the mid 1980s, the PCX was the nations third-biggest options market.
During its 124-year run, the PCX functioned during some of the country’s most impactful economic events. This included the California Gold Rush, the Great Depression, and the early use of computers, to trade stocks.
The PCX wasn’t the only exchange whose fate was altered by advances of trading technology. Case in point: The Cincinnati Stock Exchange, which was founded in 1885, closed its floor and went almost completely electronic in 1980, when it was renamed the National Stock Exchange. Similarly, The Boston Stock Exchange, launched in 1830, is a founding member of the all-electronic Boston Options Exchange. The Chicago Stock Exchange, established in 1882, absorbed several of its competitors in Cleveland, St. Louis, Minneapolis and even New Orleans over the years.