This Document is a Short Presentation of The Stock Exchange - The New York Stock Exchange (NYSE) and Defines the New York Stock Exchange, Its Participants, Purpose, and also Regulatory Organs of the Stock Exchange
2. 1. The New York Stock Exchange
(NYSE)
NYSE (nick named “The
Big Board”) is the oldest
stock exchange in United
States Located at 11 Wall
Street, New York City.
It is considered
worlds largest stock
exchange by market
capitalization.
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3. The New York Stock Exchange
Contd…
It is one of the largest stock
exchanges in the world, with some of
the most stringent listing standards.
By mandating tight standards, the
NYSE encourages larger public firms
to list their securities on it, making
the NYSE a highly reputable stock
exchange.
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4. 2. Historical Overview of
NYSE
In 1792 A group of 24
stockbrokers met under an
old Buttonwood tree on
Wall Street on 17 May and
signed an agreement to
trade with one another.
Then After, Stock trading
continued on an informal
basis for several years in
nearby coffeehouses where
merchants typically
gathered.
1792 – Signing of
Agreement
1917 – 65
Officially become
NYSE
Adoption of
Constitution
No. of Securities
Traded Increased
1865 The
Exchange moved
into first permanent
home – on a portion
of its present Broad
Street site
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5. Historical Overview of
NYSE Contd…
1878 - the installation of
Telephones at the NYSE, give
investors direct access to
brokers on the floor of the
exchange.
1929 The end of WWI, the
stock market crash of
1929 focused critical
attention on the
securities industry and
led to a number of
important reforms.
1878 –
Installation of
Telephone at
NYSE
1929 - Stock
Market
Crash
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6. Historical Overview of
NYSE Contd…
1960s computer data processing
technologies were first applied to the NYSE’s
market operations
1970s The NYSE launched its SuperDot
system which electronically delivered an
order from the broker’s office directly to the
NYSE trading post
When It Comes to today the year 2016 was a
busy year for NYSE.
A total of 534 new issuers listed on NYSE
markets
NYSE was the leader in capital raising with
$120 billion raised in 398 transactions
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1860 – Applied
Computer Data
Processing
Technology
1860 – Launched
Super-Dot
System
By 2016
534 new issuers
listed on NYSE
Raised capital
of $120 bl. In
398 Trxn.
7. 3. Buying and Selling Of
Stocks in NYSE
oOne can't just simply walk
onto the floor of the NYSE
and fill a shopping cart like we
do at the supermarket store.
Instead, must hire a brokerage
firm to buy the stock on behalf
of you.
o Stockbrokers are the people
who actually purchase stock
on the NYSE in behalf
individual / organization.
Buying Stock in NYSE
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8. Buying Of Stocks in NYSE
Contd…
Placing Order
After the investor decides what he likes he need to tell his
broker what stock he is wishing to buy and how many
shares he would like.
When buying, the investor will place a market order or a
limit order.
a) A market order: instructs the broker to simply buy
shares of a certain stock,
b) A limit order: dictates the price that the investor wants
to pay for the shares.
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9. Selling Of Stocks in NYSE
Selling Stock in NYSE
In Order to Sell Stock in NYSE it must first
get registered to be listed in NYSE Market.
Applying to Get listed involves different
processes:
1. Submission of Application to Security Exchange
Commission
2. Getting Approval from the board
3. Finding Underwriter – which is intermediary between
the company and investors.
4. Applying to Exchange
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10. 4. How Does NYSE Works?
Trading Floor (also called trading
posts) refers to a place where trading
activities in financial instruments,
such as stocks, bonds, warrants, and
rights, fixed income
securities, commodities, foreign
exchange etc., buy and sell takes
place.
There are many different types of
traders that can be found on trading
floors. The most common are
the Floor Brokers, Specialist, Floor
Trader, The Super-Dot System.
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The Specialist:
Responsible for
matching buyers to
sellers.
Floor Trader:
Are Guys in Trading
Floor waving their
hands wildly to make
trades .
The Super-Dot
System
Displays Orders from
brokers not on the
floor of the exchange
to specialists
11. 5. The Trading Process
The Bell
Opening and closing bells
mark the beginning and end
of each trading day. More
specifically, the opening
bell is rung at 9:30 a.m. to
mark the start of the
day's trading session. At
4:00 p.m., the closing bell is
rung and trading stops for
the day.
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12. The Trading Process Contd…
The trading in a stock
takes place at one
specific location on the
exchange floor, called
the specialist's post
There is a computer
screen at this post, the so
called "Display Book,"
which presents all the
current offers from
various traders to buy
or sell shares at various
prices.
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13. The Trading Process Contd…
In the trading floor, Brokers actively trade stocks
on the floor of the NYSE and thereby buyers and
sellers auction securities for the highest price.
Accordingly, the broker moves around the floor,
bringing 'buy and sell' orders to the specialists.
Each specialist stands in one location on the floor
and deals in one or several specific stocks,
depending on their trading volume.
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14. The Trading Process Contd…
o The commission broker then moves to the specialist's post
and asks for sell offers from other brokers around the post
or from the specialist if there are no sell offers available.
The competing selling brokers will indicate to the
commission broker the price at which they are willing to
sell and the commission broker takes the lowest price.
o When a trade takes place, the specialist's clerk files an
order card that reports the time, price, and quantity of
shares traded, and the transaction is then reported on the
exchange's ticker tape.
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15. The Trading Process Contd…
The specialist's job is to accept 'buy and sell' orders from
brokers and manage the actual auction.
The investor can also place different set of Orders:
a. Limit order: specifying the price at which he is willing
to buy or sell a security.
b. A limit-buy order instructs the broker to execute the
trade if the stock price falls below the specified limit.
Similarly, the investor can place a
a) Stop loss order: instructs the broker to sell the stock if
its price falls below the stipulated level, or
b) Stop-buy order: which instructs the broker to buy the
stock if its price rises above a given level. 15
16. The Trading Process Contd…
o The dealers match up the brokers with the stock
sellers, who submit an "ask" price. It's usually
higher than the bid price.
o In this way, it's like selling a home. The dealer is
like the real estate agent, who puts the buyer and
seller together.
o Specialists and brokers interact to create an
effective system that provides investors with
competitive prices based on supply and demand.
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17. 6. Regulatory Environment of the
NYSE
The NYSE was given a self-regulatory
mandate by appointment of the U.S.
Securities and Exchange Commission
(SEC), to ensure that its member firms
comply with federal securities laws, as
well as the exchange's own.
The exchange's regulators are
responsible for monitoring member
firms, launching investigations when
there is suspected misconduct - be it in
customer, sales practices or on the
trading floor - and penalizing members
when they commit violations.
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18. Regulatory Environment of
the NYSE Contd…
The following are the exchange regulatory organs for
NYSE
i. Self-regulatory organization is the organization itself, sets
its own rules and adopts acceptable and ethical business
practices.
ii. NYSE Regulation Surveillance Division: is responsible for
detecting any unlawful and unethical behavior of NYSE
broker dealers and NYSE listed companies.
iii. U.S. Securities and Exchange Commission: is the
government body that oversees the rules and operations of
the NYSE.
iv. NYSE Regulation Enforcement Division: investigates the
abuse allegations and determines if a violation of NYSE
rules has occurred.
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