Archipelago Holdings, Inc.

The Archipelago Exchange, now known as NYSE Arca, was the first open all-electronic stock exchange in the United States - and it revolutionized the way equities are traded. It now also trades options. Co-founders Gerald Putnam and Stuart Townsend began the company in 1996 in Chicago and raised their first outside capital three years later from their customers, all of them trading firms. It proved a clever way to both raise money and, essentially, to co-opt the entire trading market.

NYSE Euronext now owns Archipelago Exchange, through a reverse merger in February 2006 with the NYSE Group (now NYSE Euronext. And the Exchange changed its name to NYSE Arca. In that 2006 transaction, the Big Board demutualized and became the for-profit NYSE Group. NYSE Arca is headquartered in Chicago and employs about 150 people at its headquarters.

Archipelago began as a communications platform (ECN) and then morphed into a full exchange with the partnership (and later purchase of) the Pacific Stock Exchange. At the time, the company became Archipelago Holdings (PCX: AX) and operated the Exchange. By launching the exchange in the U.S., Archipelago offered expanded hours and used technology to better match buy and sell orders for stocks. It won market share away from the traditional exchanges (i.e., NASDAQ, the NYSE). Electronic trading created a 24/7 exchange system.

Archipelago was central to the migration of exchange trading from pits, essentially human traders doing business on the trading floors, to computer screens. By the time of its initial public offering in 2004, Archipelago's market share of the NASDAQ equities was nearly 25 percent - from zero a few years prior.