Information on the New York Stock Exchange
The New York Stock Exchange is the best-known stock exchange in the United States. It's the world's largest stock exchange as measured by the total value of the listed stocks. The NYSE started 2010 with a total market capitalization of $11.8 trillion, according to the World Federation of Exchanges.
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History
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The history of the NYSE dates to 1792, when a group of 24 stockbrokers signed an agreement to form the stock exchange. The New York Stock Exchange was a private organization until 2005. Members would buy seats on the exchange for the right to have traders on the floor of the exchange, where the process of stock trading took place.
The NYSE went public in 2005, and it merged with the European Euronext market in 2007. In 2008, NYSE Euronext purchased the historic American Stock Exchange.
Significance
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The NYSE is where many of the major corporations in America and around the world list their stock. Approximately 2,400 companies list their stock with the exchange; 500 of them are foreign corporations.
A company must meet minimum listing requirements for share price, market capitalization and revenues to be listed on the NYSE. Although it lists about 500 fewer stocks than the Nasdaq market, the value of the NYSE stocks is four times the value of the Nasdaq listed equities.
The NYSE also lists numerous exchange-traded funds, or ETFs; closed end funds; and preferred stock shares.
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Function
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The NYSE has traditionally used a floor trading system. Exchange members could have traders who placed buy and sell trades for customers on the trading floor. Specialists handled the individual stocks to ensure an orderly flow of the orders. The current stock prices are determined by the specialist matching buy and sell orders from the different traders.
Since 2005 the NYSE has moved a significant portion of the routine stock trading to electronic systems, and by 2010 more than half of the stock market's orders were being filled electronically.
The market hours for the NYSE are 9:30 a.m. to 4:00 p.m. Eastern time, five days a week.
Potential
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The main index that tracks the value of stocks on the New York Stock Exchange is the NYSE Composite Index. The NYSE Composite tracks the value change of all of the common stocks listed on the exchange. According to the NYSE, the index represents 77 percent of the value of all U.S. stocks. The index is market-capitalization-weighted, which means the larger companies have a greater effect on the index value than smaller companies do. The index composition is two-thirds U.S. companies and one-third foreign stocks.
Exchange Facts
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The Dow Jones Industrial Average is the most widely followed stock market index, and it is composed of 30 of the premier U.S. companies. Of the 30 stocks in the Dow Industrials, 27 are listed on the NYSE.
The highest price ever paid for a seat on the Exchange was $4 million in 2005.
Trading volume on the NYSE was more than 5 billion shares per day in 2010.
The NYSE is in a historic building at 11 Wall St. in New York City.
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References
- Photo Credit stock exchange image by Christopher Walker from Fotolia.com
