Prepared in November 2002 for hearings sponsored by the U.S. SEC on market structure issues, this article outlines structural problems in the listed stock and option markets and explains why many exchanges have resisted automation. The authors conclude that various market structure rules, including order-handling rules, have made it hard for specialists/market makers to profit in the decimalized environment so some have resorted to improperly exploiting the time and place advantages of manual-execution floor markets. The authors recommend restoring economic incentives for professional liquidity providers and eliminating customer priority rules, eliminating the Intermarket Trading System, and replacing trade-through rules with broker/dealer “smart-routing” systems. They also urge regulators to encourage the development of new electronic markets that provide incentives for existing players to use them. A “Postscript” provides further information on aspects of the original presentation and describes how some of the issues have evolved.