About the Operations of the New York Stock Exchange
The New York Stock Exchange is probably the most famous icon of the American economic system, but the average American does not understand how it works. If you understand auctions, you will understand the NYSE.
Other People Are Reading
-
What's Inside?
-
If you were to walk in to the NYSE, you would find 17 posts where buying and selling stocks takes place. This is done in an auction style where people referred to as specialists are conducting auctions with stock brokers. Like any auction, the specialist is attempting to gain the highest price, and the brokers are attempting to pay as little as possible on behalf of their clients.
Members Only
-
Not just anybody can trade stocks at the NYSE. In fact, only 1,366 "seats" are available. If you want a seat, be prepared to pay a lot of money.
-
"Do I hear $20?"
-
Although much is now done electronically, some old-fashioned haggling is still done on the floor of the NYSE between buyers and sellers. Often these are fast-paced negotiations much like you may have seen on TV.
Who's in Charge Here?
-
Because most stock trading is now executed electronically, very little human management is needed. The NYSE employs people to monitor the electronic trading systems and ensure that exchange rules are exercised properly. For example, Rule 123D says that a stock must open as close to the opening bell as possible. While this is rarely an issue, NYSE officials monitor this and the many other rules in place to protect traders.
Does the NYSE Act Alone?
-
No. There are many other stock exchanges in the United States and around the world. Chicago, for example, has two more exchanges.
-
