New York Stock Exchange (NYSE)
The Power of Wall Street
The New York Stock Exchange (NYSE), an American stock exchange, is located at 11 Wall Street in New York City. With a market capitalization (market cap) of more than US$28.2 trillion in October 2021, the NYSE is the world’s largest stock exchange. The NYSE, also known as the “Big Board”, has more than 2,400 company listings that are traded daily. Formerly part of Euronext, it is currently owned by the Intercontinental Exchange (ICE) and is regulated by the Securities and Exchange Commission (SEC).
History of the NYSE
The NYSE was originally founded on May 17, 1792 when 24 stockbrokers signed the Buttonwood Agreement on Wall Street in New York City. As the story has been passed down, the founding members met beneath a Buttonwood tree with the purpose of forming a centralized exchange for trading securities. The agreement eliminated the need for auctioneers, who were used frequently for wheat, tobacco and other commodities, as well as setting a commission rate for trading securities. The first headquarters was at the Tontine Coffee House and the primary focus was upon government bonds.
Twenty-five year later, on March 8, 1817, the organization officially became the New York Stock & Exchange Board. It wasn’t until 1963 that it began to operate under the NYSE name.
During the 1800’s, the NYSE expanded beyond government bonds and bank stocks. There were a series of changes that began to fuel its growth. Advancements in communications allowed transaction to occur through the telegraph, which improved the ease of trading. Exchange membership increased and became more exclusive. At the start of the Civil War, securities, commodities and gold (benefit of the Gold Rush) were driving more participation to the exchange. Even the location, which changed several times, found its way to the present location on Wall Street in 1865.
The NYSE had some turbulent times through its history, with infamous events such as Black Friday in 1869 (price of gold plummeted) the Wall Street Crash in 1929, also known as the Great Crash, and Black Tuesday in 1987, but it has remained the largest stock exchange in the world by market cap ever since the end of World War I, when it overtook the London Stock Exchange (LSE).
The NYSE merged with Archipelago Holdings on March 7, 2006, which formed the NYSE Group. Archipelago Holdings was a Chicago-based electronic stock exchange. On April 4, 2007, NYSE Group merged with Euronext to form, NYSE Euronext, the first global equities exchange. In 2012, the NYSE Euronext was taken over by an Atlanta-based futures exchange group, Intercontinental Exchange (ICE), which spun off Euronext.
The NYSE market cap was US$23.68 trillion at the beginning of 2019, which is nearly 40% of the total world stock market value. There are over 2,800 companies listed on the NYSE, which span across sectors such as finance, healthcare, technology, consumer goods and energy. Some of its more famous companies include ExxonMobil (XOM), Coca-Cola (KO), Citigroup Inc (C), JPMorgan Chase (JPM) and Pfizer Inc (PFE). The Dow Jones is the most used index for tracking the value of the NYSE but some of its components can also be listed on the NASDAQ.
Trading on the NYSE
When a company registers with the NYSE, often with the goal to raise capital, shares of the company become available for public trading. Investors and traders who want to invest in the stock market can buy and sell stocks through stockbrokers and online portals that are authorized to trade securities on the NYSE. Trading initially takes place on the trading floor through floor brokers and Designated Market Makers (DMM). The NYSE assigns DMM’s, formerly known as specialists, to each stock to provide liquidity, which is the only exchange that requires this assignment.
Trading is automated, with the exception of occasional high-priced stocks, making the NYSE the premier hybrid market. Trades execute in less than a second when submitted electronically, while manual trades typically take nine seconds. In addition, trades run in a continuous auction format.
NYSE Regulated Markets
- New York Stock Exchange (The world's most trusted equities exchange)
- NYSE Arca Equities (The leading exchange for exchange-traded funds)
- NYSE American (An exchange designed for growing companies)
- NYSE Arca Options (Offering an anonymous, flat, open market structure)
- NYSE American Options (Offering traders deep liquidity across listed option contracts)
- NYSE National (Combining the high performance of NYSE Pillar technology with a taker/maker fee schedule)
- NYSE Chicago (Supporting the institutional brokerage community)
- NYSE Bonds (Access to live, executable, transparent prices)
On the NYSE, investors can trade several major asset classes including equities, options, exchange-traded funds and bonds.