What is the New York Stock Exchange (NYSE)?
The New York Stock Exchange (NYSE) is the world’s largest securities exchange, facilitating the buying and selling of stocks, bonds, options, and other financial assets. Located on Wall Street in New York City, the NYSE has a market capitalization exceeding $26 trillion across more than 2,300 company listings.
Founded in 1792, the NYSE established early trading regulations and commissions for securities exchanges. It pioneered floor-based open outcry auctions that were later supplemented by electronic trading systems.
Today, the NYSE relies on a high-tech electronic trading platform while still supporting hybrid markets incorporating human specialists on its iconic trading floor. The exchange offers companies access to investors and capital and is compensated for managing this huge infrastructure via transaction fees and market data revenues.
How the New York Stock Exchange Works?
The NYSE enables trading through continuous auction market systems connecting broker-dealers and institutions looking to buy and sell financial securities. This allows asset prices to be determined transparently based on supply and demand forces.
Historically, the open outcry system was used on the NYSE trading floor. Brokers would call out prices (bids to buy and asks to sell) and trade with one another through verbal and physical gestures when orders matched.
Today, the NYSE market model still allows orders to route to floor brokers alongside electronic systems.
Millions of orders flow into the NYSE’s electronic trading platforms each day. Advanced computer algorithms match and facilitate transactions while optimizing market quality.
Participants of the NYSE
Several constituent groups participate in the New York Stock Exchange. This is an overview of who those participants are:
- Brokers: The NYSE has registered hundreds of member firms who trade on the exchange on behalf of clients or themselves. To qualify, brokers must meet certain capital requirements and ownership standards.
- Specialists: Experts who facilitate trading in specific securities listed on the exchange. There are currently hundreds of specialists working on the NYSE floor every day. They place trades on behalf of the institutions they represent and manage order flow and other similar tasks.
- Designated Market Makers (DMMs): These companies maintain fair and orderly markets for the securities they oversee. They provide liquidity and price transparency and help narrow bid/ask spreads for NYSE-listed securities.
- Floor Brokers: They perform trades on the NYSE floor based on orders they receive electronically or via phone or paper tickets.
- Investors: Millions of individual, institutional, and corporate investors whose buy and sell orders ultimately get matched on the NYSE.
Companies aspiring to list their financial instruments on the NYSE must meet strict financial and corporate governance requirements. Some initial listing requirements include:
- Earnings Criteria: At least $10 million aggregate pre-tax earnings over the past 3 years.
- Valuation Standards: Global market capitalization exceeding $200 million and an average closing price of at least $4 per share in the past 90 days to remain listed.
- Shareholder Numbers: Companies must have at least 1.1 million publicly held shares and a total of 400 different stockholders owning more than 100 shares.
- Operating History: The company must have a minimum operating history of three years.
This is just a brief summary of the criteria enforced by the exchange for new issuers. Many more requirements need to be met before a company is approved to be listed on the NYSE.
Once qualified, securities will begin trading on the NYSE after an initial public offering (IPO) is completed. Companies may later issue additional shares via follow-on offerings.
Benefits for NYSE-Listed Companies
Listing equity instruments in the NYSE offers several advantages for public companies, including the following:
|Companies are listed alongside industry leaders and blue-chip stocks and can use this to enhance their reputation.
|Access to Capital
|Issuers can tap a huge investor base to efficiently raise funds.
|The large average daily trading volumes of NYSE-listed shares provide transparent pricing and updated valuations for equities.
|The names of listed companies are constantly displayed across financial websites, apps, publications, and TV networks globally.
Prominent companies choose to list on the NYSE in part due to these benefits. Household names include Coca-Cola, Walmart, Apple, Disney, McDonalds, GE, IBM, Boeing, and many more blue-chip stocks. The NYSE has also attracted high-profile technology IPOs such as Salesforce, Shopify, Wayfair, and more.
NYSE Market Statistics
As the world’s largest equities-based exchange, the sheer scale of trade occurring on the NYSE is immense, handling trillions of dollars in transaction volumes annually.
Some key statistics about the New York Stock Exchange:
- The market capitalization of listed securities exceeding $26 trillion.
- More than 2,300 listed issuers.
- 530+ international companies from 45 different countries have listed their shares in this exchange.
- The exchange averages $18.9 billion in daily trading volumes.
History of the New York Stock Exchange
Founded in 1792, the beginnings of the New York Stock Exchange emerged out of the Buttonwood Agreement signed by 24 stockbrokers outside of 68 Wall Street (later to become the NYSE home).
The agreement set in place critical foundational elements for securities trading, such as:
- Auction-based open outcry trading mechanisms,
- Standardized brokerage commissions,
- Governance structure
This established mutual promises to trade securities exclusively with one another by adopting a fixed rates scheme. It brought organization and regulation to a system previously known for manipulations and duplicitous practices.
Over the next century, the NYSE formalized its rules, ownership structure, and location. In 1817, it officially became the “New York Stock & Exchange Board”. It later moved into a permanent home on Wall Street in 1865.
In 1817 NYSE was formally organized with the adoption of a constitution for the “New York Stock & Exchange Board” https://t.co/G4VCfHW73d
— NYSE 🏛 (@NYSE) March 8, 2016
With the advent of telegraph and telephone communications by the early 20th century, the NYSE adapted its auction market system. This allowed the exchange to handle growing trade volumes as the US economy rapidly expanded.
The NYSE further modernized its infrastructure by adding computers in the latter 20th century. This augmented traditional floor trading rather than replacing it with the adoption of electronic handheld order-routing devices in the 70s and 80s. Today, advanced algorithmic systems match trades while specialists preserve human oversight.
Throughout its 230+ year history, the NYSE has pioneered innovations shaping securities exchanges globally. Its hybrid market system balances technological solutions with human insight, oversight, and judgment.
New York Stock Exchange Trading Hours
The regular NYSE trading session runs Monday through Friday as follows:
9:30 am to 4:00 pm Eastern Time
The exchange is closed during the following official holidays:
- New Year’s Day.
- Martin Luther King Jr Day.
- President’s Day.
- Good Friday.
- Memorial Day.
- Juneteenth National Independence Day.
- Independence Day.
- Labor Day.
- Thanksgiving Day.
- Christmas Day.
On early close days, hours run from 9:30 am to 1:00 pm Eastern Time
These early closures occur on
- Day After Thanksgiving
- Christmas Eve
After-hours trading sessions also operate outside regular market hours on weekdays. This extended trading window offers wider access to NYSE-listed securities through private broker-dealer networks.
Location of the New York Stock Exchange
The iconic New York Stock Exchange building has stood on Wall Street in the heart of Lower Manhattan’s Financial District for over a century.
The neoclassical NYSE edifice located at 18 Broad Street (at the corner of Wall Street) opened in 1903. It replaced the previous headquarters at 10-12 Broad Street, housing the exchange since 1865.
With its stately Corinthian columns topped by a pediment displaying Integrity Protecting the Works of Man, the building exudes Wall Street’s legacy. It remains home to the NYSE’s trading floor and operations.
Who Owns the New York Stock Exchange?
The NYSE was a private membership-owned organization for over 200 years. In 2006, the exchange acquired the electronic trading firm Archipelago Holdings.
A subsequent acquisition joined the iconic NYSE with Euronext, a leading European exchange group, in 2007. This created the NYSE Euronext – the first global equities exchange.
In 2013, Intercontinental Exchange (ICE) purchased NYSE Euronext for $11 billion. ICE is now the parent company controlling the New York Stock Exchange as a wholly-owned subsidiary – making it one of the few investor-owned stock exchanges.
Headquartered in Atlanta, Georgia, Intercontinental Exchange began founding modern commodity futures exchanges in 2000. With its acquisition of the NYSE, ICE dominates equities exchange markets globally.
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