How Was the New York Stock Exchange Created?
The New York Stock Exchange (NYSE) is one of the most well-known stock exchanges in the world. In addition, the combined market values of all the companies listed on the NYSE make it the largest in the world. However, the prominent role of the exchange in financial markets grew out of more modest beginnings. The long history of the NYSE illustrates how the exchange was originally created and how it continues to recreate itself to keep up with the changing demands of a modern stock market.
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Buttonwood Agreement
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The Buttonwood Agreement is regarded as the historical origin of the NYSE. The Buttonwood Agreement was signed in 1792 under a buttonwood tree at the southern tip of Manhattan by New York's leading businessmen of the time. As part of the agreement, the signers agreed to trade securities for a commission. According to the NYSE, only three federal government bond issues and stock from two banks were traded at the time of the Buttonwood Agreement.
Constitution
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By 1817, securities brokers joined together to formalize the creation of a formal exchange. The new organization was called the New York Stock & Exchange Board. Brokers were bound by the rules of a new constitution that regulated trading activity and commissions. In addition, the new organization moved into space rented to serve specifically as the first trading floor.
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Expansion
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The success of the New York Stock & Exchange Board resulted in a name change and expansion in 1865. The name of the exchange was changed to its now familiar New York Stock Exchange. The exchange also grew out of its rented rooms and into a permanent headquarters on 10-12 Broad St. In addition to the new location, the exchange also bought nearby land. By this time, both Wall and Broad streets had grown into the center of securities trading in New York.
Permanent Home
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In 1903 the NYSE moved into its current headquarters, the now famous neo-Roman style building off Wall St. This new trading facility was significantly larger than the one used in 1865.
Recent Developments
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The NYSE continues to develop as it adapts to electronic-based trading. A series of acquisitions have allowed the exchange to make about half of its trades electronically. For instance, one of the most significant developments was the merger between the NYSE and Archipelago Holdings Inc., creating the New York Stock Exchange Group Inc. The move modernizes trading at the NYSE, which can now trade securities through Archipelago's vast electronic trading platform.
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- Photo Credit new york stock exchange image by Gary from Fotolia.com
