In the 1980s, Wall Street operated under the strict rules of tradition, dominated by large brokerage houses and entrenched “old” money. The inefficiencies of the market allowed brokers to impose high commissions and inflated spreads, profiting at their customers’ expense.
Maschler, frustrated with this status quo, sought to change the landscape of trading. Drawing from his early life experiences in war-torn Europe and Brooklyn, he rejected the inefficiencies of Wall Street. In founding Datek and later The Island ECN, he aimed to democratize market access, offering low-cost investing options to the masses.
One of Maschler’s key innovations was the Small Order Execution System (SOES). This system expedited trading, reduced costs, and faced resistance from the traditional establishment, including the SEC. By forcing market makers to honor their quotes, SOES diminished the significance of inflated spreads, revolutionizing the trading process.
The Island ECN further challenged traditional practices by promoting a transition from fractional listing to a decimal system, enhancing efficiency and reducing unfair profits for brokers. Maschler’s unwavering confidence in his innovations led to their overwhelming success, fundamentally altering Wall Street’s approach to customer service and paving the way for a more equitable financial landscape.
