How to start a real stock exchange?
I am thinking about creating a small stock exchange in my city.
How do you determine if another stock exchange is needed or not? We already have the NYSE, NASDAQ, AMEX. Why create another stock exchange? I was thinking, what if terrorists try to blow up New York. Then the stock market is dead. We need a backup stock exchange in case there is some big trouble in NY.
How do you create a stock exchange? Do you have to have more than a million dollars to start? And do you have to be incorporated in order to start? What kind of computers and programs are needed that make a stock market function? Can you refer me to a book that explains in detail how the NASDAQ or NYSE got started and how it works?
Any information helps! Thank you.
I’ve read Wall Street, The Story of the Stock Exchange by Dorothy Sterling. But this book was very brief, written for children I guess. 
Small exchanges do in fact exist, but back up exchanges are not needed. You would likely need a nuclear exchange to wipe out the exchange process in the United States. One of the surprises of 9/11 to many firms was that they didn’t actually need their NY office. They functioned fine without it.
You will need several million to start. You should not look at the NYSE or the NASDAQ for cues. They already perfectly cover their markets.
What you need to look at are the ECN’s such as Island and how they started and the Arizona Stock Exchange, which recently failed and went out of business. It had a wonderful business model that no one wanted.
If I were you, I would not consider an exchange. You would have to provide something which is not already provided or provide it far more efficiently.
You cannot crack into the NASDAQ market because it is protected by law. It also isn’t an exchange but rather a quotation system.
You do not need to be incorporated, per se, but you cannot be a proprietorship either. All of the programs are proprietary so you would need to write your own.
SID – DEAD STOCK – Sympathy
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