Exactly 31 years ago today, the stock market fell 23 percent, the worst day ever for stocks two times over. It was in the aftermath of that crash that the idea for exchange-traded funds was born. And it came from a very unlikely place: the U.S. Securities and Exchange Commission.

In this first of six episodes of "The ETF Story," narrator Joel Weber, editor of Bloomberg Businessweek, and ETF expert Eric Balchunas journey back to Black Monday. They speak with those who were there, including the SEC commissioner and young lawyer who sketched out how it could help avoid another crash. We also hear from the man who created "portfolio insurance," which many blame for exacerbating that 1987 selloff.

The episode ends with the introduction of Nate Most and Steve Bloom, the two market nerds who, working under Arthur Levitt at the third-place American Stock Exchange, took the SEC’s sketch and ran with it in a big way.

To listen on the Bloomberg terminal, click on the player thumbnail on the sidebar. To listen on your mobile device click https://www.bloomberg.com/audio

Running time 16:36

Before it's here, it's on the Bloomberg Terminal. LEARN MORE