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Introduction To The New York Stock Exchange

Introduction To The New York Stock Exchange

The New York Stock exchange is the largest auction market place in the world and is physically located at 11 Wall Street in New York City.  The NYSE is nicknamed “The Big Board” or just simply “The Exchange”.

 

The NYSE can trace its history to 1792 when 24 stockbrokers signed an agreement that would establish rules for buying and selling securities amongst each other. This was known as the Buttonwood Agreement.  In 1817 the signers of the agreement drafted a constitution and named their organization the New York Stock & Exchange Board.  In 1863 the name was shortened to the present form New York Stock Exchange or NYSE.  Trading occurred on the floor as brokers would yell out their orders and trade amongst themselves on behalf of their clients.  This form of trading is known as “open outcry” and while open outcry still exists today at NYSE, the majority of volume is traded through an electronic exchange: Archipelago Exchange (ARCA Exchange) which was purchased by the NYSE in 2006.  In 2007 the exchange merged with a European electronic exchange Euronext to form NYSE Euronext, which was branded as the “first global stock exchange”.  In late 2012, it was announced that the NYSE would be sold to Intercontinental Exchange (ICE) which is a futures exchange for $8 billion.

Today, approximately 3000 companies worth around $20 trillion dollars are listed on the exchange.  Average stock volume on both NYSE (and their electronic trading version ARCA) is around 5 billion shares daily.  Listing requirements on NYSE are often very strict and most of the companies listed are “blue chips” or well known, stable, large companies such as IBM, McDonalds, DuPont and Boeing.  Companies listed on the NYSE are abbreviated in up to 3 letters (and on occasion 4 letters). This is known as a “ticker”.  For example the ticker for McDonald’s is MCD and the ticker for Bank of America is BAC.  Investors would type in the company ticker on their brokerage platform to obtain the current price of the stock.

The largest companies listed on the NYSE are as follows:

Company Name Stock Ticker Industry Headquarters
Exxon Mobil XOM Oil and Gas Irving, Texas
Walmart WMT Retail Bentonville, Arkansas
Sinopec Group SNP Oil and Gas Beijing, China
Chevron CVX Oil and Gas San Ramon, California
ConocoPhillips COP Oil and Gas Houston, Texas
Toyota TM Automotive Toyota, Japan
General Motors GM Automotive Detroit, Michigan
General Electric GE Conglomerate Fairfield, Connecticut
Berkshire Hathaway BRKA and BRKB Conglomerate Omaha, Nebraska
Ford F Automotive Dearborn, Michigan

 

About the author: Jayson Derrick is the director of trading at PromptTrader, an international proprietary trading firm that deals  in US equities and options. 

 

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