| Abstract: | Within four months of the stock market crash on October 19, 1987, there were six studies of what happened. The Brady Commission,
the Commodity Futures Trading Commission, the Securities and Exchange Commission, the General Accounting Office, the New York
Stock Exchange, and the Chicago Mercantile Exchange all produced reports that described and analyzed the Crash, and in some
cases made recommendations for additional regulation. This paper examines the conclusions and analyses contained in these
reports and provides a summary of their recommendations. Particular attention is given to the allegation that stock index
futures trading was a significant factor in the Crash. In addition, the recommendations that higher margins be imposed on
futures transactions and that formal trading halts be instituted in both the futures and stock markets are discussed in depth.
A major conclusion of this review is that new market-making procedures are needed to cope with the growing institutionalization
of trading in equity and equity-derivative markets.
Columbia University |
