New York Stock Exchange

The New York Stock Exchange (NYSE) is the largest stock exchange in the world, although its trading volume was exceeded by that of NASDAQ (historic comparison graph {pdf}) during the 1990s. Total market capitalization of the NYSE is five times that of NASDAQ. The NYSE agreed to merge with the fully electronic stock exchange Archipelago Exchange in late April 2005. New York Stock Exchange, Inc has its main building located at 18 Broad Street, at the corner of Wall Street, on the south side of Wall Street, in New York City, New York, U.S.

Business

NYSE trades, unlike those on electronic exchanges (e.g. NASDAQ), always involve face-to-face communication in a particular physical location. There is one station at each post on the trading floor for each of the exchange's stocks. Exchange members interested in buying and selling a particular stock on behalf of investors gather around the appropriate post where a specialist broker, who is employed by a NYSE member firm (that is, he/she is not an employee of the New York Stock Exchange), acts as an auctioneer in an open outcry auction market environment to bring buyers and sellers together and to manage the actual auction. They do on occasion facilitate the trades by committing their own capital (approximately 10% of the time) and as a matter of course disseminate information to the crowd that helps to bring buyers and sellers together. Most of the time natural buyers and sellers meet in a market that provides price discovery in an auction environment that produces the fairest price for both parties. The human interaction and expert judgement as to order execution differentiates the NYSE from fully electronic markets. The hybrid market structure is constantly in need of improvement and has trouble keeping up with new innovations in trading technology with too many humans on the floor. The frenzied commotion of men in colored smoks has been captured in several movies, including Wall Street and Trading Places.

Related Topics:
NASDAQ - Natural buyers - Wall Street - Trading Places

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