I'm personally confused that we could even ask this question.
How could you not have multiple exchanges? They don't sprout out of magic beans; they're markets. Inherently, they're groups of people deciding to do business with each other. Almost the only thing that makes them substantively different from a farmer's market is standardized contracts.
In the stock market of the 1950s, if you were a naive corporate buyer or seller, something like 10 different kinds of market participants could (and would) fleece you on every transaction. You probably couldn't even get a quote without getting hit by some kind of scam.
How much better would the markets be today if we had taken the 1950s system and granted it a monopoly?
Actually, it IS just one big distributed exchange since Reg NMS requires each ATS to route an order to a rival with a better price.
This is good, because new ATS's dont need to worry about network effects and can compete on features.
On the other hand, this required functionality could limit the set of possible new features. For example, it may be difficult to implement some way to discretize or slow down markets to remove any unnecessary advantages conferred on HFT traders, because of this mechanism.
How could you not have multiple exchanges? They don't sprout out of magic beans; they're markets. Inherently, they're groups of people deciding to do business with each other. Almost the only thing that makes them substantively different from a farmer's market is standardized contracts.
In the stock market of the 1950s, if you were a naive corporate buyer or seller, something like 10 different kinds of market participants could (and would) fleece you on every transaction. You probably couldn't even get a quote without getting hit by some kind of scam.
How much better would the markets be today if we had taken the 1950s system and granted it a monopoly?