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Jared Dillian
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Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

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April 30, 2002

Pacific Storm As Prices Plummet

By Gregory Bresiger

With seat prices on the Pacific Exchange sharply declining, some angry seat lessors are talking about suing the exchange. The PCX Lessor Association, in a letter to members, charges that the exchange "has failed to honor its promise to stabilize seats prices." The letter, from Paul Liang, chairman of PBL Partners and a harsh critic of the exchange, asks members to consider suing the exchange.

A spokesman for the exchange says the PCX has not "breached its fiduciary duty," as charged in the letter. Dale Carlson also says that, "there have been some dramatic changes in the markets which are why these seat prices have gone down, including an expansion on the number of places in which options trading can now take place." He added that decimalization along with a declining market have also cut into the value of the Pacific Exchange's 552 seats. But the letter charges that the PCX failed to honor a promise to keep the value of seat prices stable.

Whatever the reason, no one debates the price of a seat has been going down. In July of 1996, a seat was selling for $140,000. Recently, someone bid $31,000 for a seat that was selling for $36,000. Carlson says the bull market of the 1990s drove up the value of a seat and created the market for leasing seats.

"Before the 1990s, hardly anyone leased a seat," he added. "Everyone, or almost everyone who owned a seat, used it to trade. Today, about one third of our seats are owned by people who are not traders, but lease the seats."