NYSE

The New York Stock Exchange (NYSE) is the largest equities-based exchange in the world. At one time, it was a private organization, but became public in 2005 when the NYSE acquired Archipelago, which is an electronic trading exchange. [1]

In 2007, the NYSE merged with the European exchange and the parent company of the NYSE is now NYSE Euronext. [1]

For the longest time, the NYSE relied primarily on floor trading, but now over 50% of the trades are carried out electronically (similar to other exchanges like NASDAQ) as opposed to the majority using the outcry system. [1] This has made the floor at the NYSE a little quieter than it used to be. Nevertheless, floor trading is still alive and well as traders are setting their prices and are dealing in high volume trading.

Trading

With its beginnings all the way back to 1792, many of the best known companies in the world find their home to be with the NYSE when they decide to become public. Because of the fact that the NYSE merged with the European Exchange, there are many foreign companies that are able to list themselves with the exchange. But when a foreign company decides that they want to list on the NYSE, they must meet the rules that are established by the Securities and Exchange Commission (SEC).

Basically, the NYSE is the doorway in which a lot of trading takes place. Without this doorway, it simply would not happen. If it would happen, then it would not be in the organized fashion in which it is done today. Plus, there are regulatory agencies put in place to ensure that trading is not done illegally. If it were not regulated, then many would have the opportunity to scam others and this would deter people from trading, which is something that the world economy cannot afford.

Trading takes place on the exchange from 9:30a.m. to 4:00 p.m. EST, Monday through Friday. It is not common that the NYSE will close early, but it can happen, and you can expect for the exchange to be closed during holidays.

The Trading Floor

The NYSE trading floor is loud and it is as if it has a constant auction occurring. Traders are there executing trades for their investors. There are different posts within the building where there are specialist brokers who act as auctioneers. This specialist is not employed by the New York Stock Exchange, but is an employee of a member firm.

What this auctioneer does is used what is called the "open outcry" system in order to make trades happen. If it must be done, the specialist broker will put up some of their own capital in order to display the worthiness of a stock and that will bring buyers and sellers together to make a deal.

As of now, stocks can be traded electronically. The New York Stock Exchange does have what is called a hybrid market, which eliminates the open outcry system. Nevertheless, high-priced stock and small groups are not eligible to be traded electronically. They must utilize the open outcry system, which is why the floor on Wall Street is quite busy. Many are investing in these small stocks. Sometimes, the high-priced stocks will split and this can make for even more action.

Open Outcry

Before the open outcry system was implemented in the 1870s, the members sat in chairs. So what the open outcry system is today is one that sticks to tradition. Despite the fact that the world is becoming more electronic, on-floor auctions are going to continue to take place. It has been for almost 140 years.

[1] http://www.investopedia.com/terms/n/nyse.asp 07/07/2010

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