Lessons from 40 years of Mayday on Wall Street: Column

Forty years ago today, Wall Street shouted "Mayday!" and, for the first time, its doors were opened to those who stood to benefit from it the most: Main Street investors.

Never before has it been easier for the average American — the teacher, the engineer, the nurse — to invest in his or her financial independence with the click of a mouse (or swipe of the thumb). Investing has become so commonplace that it's easy to forget it wasn't always so.

That's why today is special.

On May 1, 1975, the Securities and Exchange Commission, for the first time, allowed brokerage firms to set their own commission prices for buying and selling stock. Dubbed "Mayday" by industry insiders, the move, nearly 200 years in the making, opened Wall Street to competition and built a legacy that has made a lasting impact on the financial futures of millions of Americans.

Prior to Mayday, Wall Street was the domain of the privileged. It was confusing and cost-prohibitive for the average American.

You needed other people — to research investment ideas, to take your order, or to manually broker it on the floor of the only game in town, the New York Stock Exchange, while you waited by the phone or mailbox for confirmation. The average order to purchase stock in 1975 cost more than $500 in today's dollars — a trade that costs less than $10 today.

Mayday allowed new participants, "discounters," to create a new industry positioned to democratize investing.

First with the touch-tone phone, then with the Internet, we embraced emerging technologies and innovation to make investing more affordable, understandable and accessible. We and other Mayday pioneers drove the charge to deliver more financial information, help and education to anyone who wanted it.

And millions wanted it.

By 1983, 1 in 5 American households held equity investmentsand, today, more than half do. According to a 2014 McKinsey report, the U.S. individual investor or "retail" investing market, now at $15 trillion in assets, is the largest in the world. It's a market that places more than 1 million trades per day — more than 10 times the total daily orders handled by the New York Stock Exchange one year before Mayday.

Mayday's legacy gave investors a voice, and that voice has influenced sweeping regulatory changes addressing how the stock markets are structured that, when combined with innovative technology, have helped deliver, among other things:

• Lower costs, with commissions down 70% in the last 20 years alone;
• Faster trade executions, with execution speeds now averaging less than 1 second; and
• Narrower spreads, with the conversion in 2001 to one-cent increments.

Thanks to Mayday, Wall Street is open, and more Americans are investing in their futures.

And the best part is that we're not done yet.

Innovation continues. Newer technologies like social media and mobile, and enhanced use of data and analytics, are giving investors new ways to personalize their interactions with the stock market every day. There now exists a global interconnectedness and a willingness to share information and ideas, making today's investors more knowledgeable, savvy and confident than ever before.

Since 1975, the Mayday pioneers and their successors have committed to a common commitment to helping the average American investor. They have never shied away from change — recognizing that while things are better than they've ever been, they're not perfect.

We must carry that legacy forward.

Innovation aside, there remain aspects of the investor experience that need our help, like the fixed-income market. Unlike the equity and options markets, which have benefited tremendously from the Mayday legacy, the fixed-income market has lagged behind. The investor's experience today is archaic, opaque and cumbersome.

Let's not wait for it to become another crisis to make a change.

Instead, let's continue to transform and enhance. Let's welcome new players and ideas. Let's continue to ask how we can be better.

The American investor still needs a level playing field — for more of Wall Street to be opened to Main Street. Our industry, born of Mayday and grown via innovation, needs to rise to that challenge and bring it to them in a way that meets their expectations today, and tomorrow.

That's the Mayday spirit.

Fred Tomczyk is the president and CEO of TD Ameritrade.

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