Exchanges, rules governing

The first emerging stock markets arose in the nineteenth century under very different legal and political environments. In London and New York, the central exchanges operated as self-regulating organizations under Anglo-American common law but with distinct incentives due to the much different initial assignment of property rights in the exchange. The central exchanges in Berlin and Paris effectively became self-regulating organizations as well but under statutory legal regimes that contrasted sharply with those in Britain and America. Comparing the four leading industrial powers of the world as of 1914, it appears that Britain and the United States had achieved the highest degree of complementarity between central and regional exchanges due to the similarity in their legal environments. The differences in their political arrangements, however, made the regional exchanges in the United States much more competitive with the central exchange.