New York Stock Exchange

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Type: Non-Profit Company
Address: 11 Wall Street, New York, New York 10005, U.S.A.
Telephone: (212) 656-3000
Fax: (212) 656-2126
Web: http://www.nyse.com
Employees: 1,500
Operating Revenues: $735.5 million (1999)
Incorporated: 1971
NAIC: 52321 Securities and Commodity Exchanges
SIC: 6231 Security & Commodity Exchanges

Founded in 1792 amid the budding financial enterprises of lower Wall Street in New York City, the New York Stock Exchange (NYSE) has evolved into one of the world's foremost securities marketplaces. It is the oldest and largest stock exchange in the United States, and one of the most important world-wide. The NYSE currently operates as a not-for-profit corporation, run by a board of directors and its 1,366 members. About 3,000 companies, both domestic and foreign, are listed on the NYSE. These companies have a combined market capitalization of $15 trillion. The NYSE runs a floor-based trading system, where members called specialists are assigned to particular stocks. The specialist is charged with maintaining a fair and orderly market for the assigned stocks. The system requires human beings on the trading floor, but it is also highly automated, and has the capacity to process about ten billion shares a day. Changes in information technology in the late 1990s led to increasing competition from the NASDAQ (National Association of Securities Dealers Automated Quotation) exchange and from alternative electronic brokerages. NYSE announced plans in the late 1990s to transform itself into a public company, though by 2001 no definite date for the change had been set. The NYSE makes most of its revenue from fees on listings and on trading and market data.

The NYSE took shape in New York City in the 1790s, where merchants and brokers held public auctions and negotiated deals in and around the landmark Tontine Coffee House at the corner of Wall and Water Streets. New York proved a particularly rich market for the government securities which had helped fund the Revolutionary War. As New York commerce evolved, the budding securities market grew accordingly in complexity and scope. On May 17, 1792, two dozen brokers signed the 'Buttonwood Agreement,' founding the Exchange on lower Wall Street. They agreed to avoid public auctions, to collect minimum commissions on federal bonds (public stock), and to 'give preference to each other' in their trading deals.

Following the War of 1812, the stock market experienced unprecedented growth. Increased trade with Britain transformed New York into the leading American port. Private and commercial banks proliferated. Key brokers decided to establish a steady forum--with a fixed location and regular hours--and on March 8, 1817, they adopted a constitution and the name 'New York Stock & Exchange Board' (NYS & EB).

The NYS & EB was governed by distinct rules and procedures. Members were elected on the basis of a ballot-style election process. The exchange followed rules regarding sales and delivery procedures, commission rates, and business ethics. Stipulations also controlled absenteeism, distractions during bidding, and even the wearing of hats. Daily trading consisted of members bidding on securities from designated seats, while the president 'called' out each stock or bond.

The stock market fed off a flow of new capital from the 1820s to the 1830s. Trading of federal securities financed the construction of roads, bridges, canals, and municipal water, sewerage, and lighting systems. New laws brought governmental charters within closer reach of young companies. Consequently, trading volume at the NYS & EB rose from an average of 100 shares per day in 1827 to 5000 shares per day in 1834. By the late 1830s, however, the securities market followed the overall economy into a slump. British cutbacks in American investment, rampant speculation in land and securities, and the 1836 closing of the federally-chartered Second Bank of the United States culminated in the Panic of 1837. Though it lost the momentum it had gathered in the 1820s and early 1830s, the NYS & EB managed to survive until the down cycle reversed in 1843.

Among the many new issues listed at the Board, railroads accounted for particularly high trading volume in the mid-1800s. Though the first railroad issue--Mohawk & Hudson Railroad--was listed on the Exchange in August of 1830, the rail frenzy reached its pinnacle in the 1850s and 1860s. By the early 1850s, the NYS & EB listed over ten rail companies.

In 1863, the Board changed its name to the New York Stock Exchange (NYSE) and began construction of its first permanent building. Designed by John Kellum, in the Italian Renaissance style, the new space accommodated expanded business. The second-floor Board Room was designed to seat the elected members with assigned places from which they negotiated the stock call, held three times daily.

With the end of the Civil War, intense capitalization of American industry spurred unprecedented growth in stock trading and the emergence of new and competing exchanges. In 1869, the NYSE joined forces with two key competitors: the Open Board of Brokers and select representatives from the Government Bond Department. These mergers were accompanied by administrative and organizational changes that would effect the shape of the NYSE over the following century. Trading volume rose substantially to over $3 billion in securities, a figure that was managed by a body of 1060 members, up from 533 before 1867. On October 23, 1868, memberships were made salable, with prices averaging between $7,000 and $8,000. Continuous trading replaced the 'call' system.

The latter half of the nineteenth century brought numerous technological advances. Communications between brokers, investors, and different exchanges were catapulted by the development of the telegraph in 1844, the completion of a transatlantic cable in 1866, and, eventually, the development of the telephone, which reduced trading time from roughly 15 minutes to less than sixty seconds after 1878. The NYSE also benefited from the 1867 introduction of the first stock ticker. In order to control accuracy and fair distribution of trade information, the NYSE established its own New York Quotation Company to gather transaction data and distribute it systematically to ticker companies.

Despite efforts to control trading, a combination of financial buccaneering and broad economic influences disrupted the securities market in the late 1860s and early 1870s. Reckless gold speculation in 1869, including an attempt by Jay Gould and James Fisk, Jr., to corner the gold market, prompted the U.S. government to sell some of its supplies, precipitating a sharp break in gold and other securities on September 24. The investor calamity earned the name 'Black Friday.' In September 1873, the failure of Jay Cooke & Company sparked another major market break that closed NYSE offices for ten days and scared the securities industry until the end of the decade.

By the 1880s, the scope and trading volume of the NYSE reflected the rise of large corporations and industry-wide trusts. The Exchange created an 'Unlisted Department' through which shares were traded until a company qualified for regular listing (the department was abolished in 1910). On December 15, 1886, the exchange traded a record 1.2 million shares. When trading volume reached three million shares in April of 1901, plans were drafted for expanded offices. Completed in 1903, the new Exchange building was designed by George B. Post in the classical-revival manner. To embellish the white marble facade, J.A. Ward sculpted the figures of 'Integrity Protecting the Works of Man.'

In the early 1900s, the NYSE saw the rise of oil and steel industries and the tremendous financial clout of such magnates as John D. Rockefeller, Henry Clay Frick, and John Pierpont Morgan. On October 23, 1907, monetary inflation and speculation caused a run on banks and a rapid decline in stock prices. Containment of the crisis was largely attributed to Morgan, who organized a consortium of major banks to hold up the market with a subscription of over $25 million. The Panic of 1907 had almost abated when World War I broke out in the summer of 1914, with foreign exchanges closing down in droves. By July, the NYSE stood as the last major exchange to absorb worldwide investor panic. It suspended trading until December 14. When it reopened, military procurements stimulated renewed trading energy that carried the NYSE prominently into the 1920s. To finance the war, large issues of United States Liberty Bonds were traded, attracting new investors.

After the war, the American economy was powered by retail chain stores and massive holding companies which accounted for rapid expansion in new issues, greater volume of trading, and increasing value of listed shares. The NYSE took several measures to maintain order amid the flux of new activity: the Stock Clearing Corporation was established on April 26, 1920, to facilitate transfers of cash and stock between members, banks and trust companies; Exchange membership was increased from 1100 to 1375 in 1929; and the trading floor was physically expanded and updated to handle higher volume. While the market value of all NYSE listed stocks was $27 billion in 1925, it jumped to approximately $90 billion by 1929.

In the late 1920s, financial optimism persisted despite signs of weakening markets in agriculture, real estate, and construction. On October 24, 1929, however, the market underwent its first sharp break, known as 'Black Thursday.' One week later, on October 29, 1929, the market crashed. Stock prices dropped 11.7 percent and volume soared to a record 16,410,000 shares. The Dow Jones Industrial Average dropped from 386 to 41.

The United States Congress passed corrective legislation, of which the Securities Act of 1933 and the Securities Exchange Act of 1934 directly influenced the NYSE. The 1933 Act mandated the registration of all new issues of securities with the Federal Trade Commission (FTC) and the full availability of all pertinent information to investors. The later Act created the Securities and Exchange Commission (SEC) to monitor price manipulation, speculation, and unfair practices in all securities exchanges. On October 1, 1934, the NYSE registered with the SEC as a national securities exchange. The NYSE initiated substantial organizational change with the June 30, 1938, election of its first full-time paid president and chief executive officer, William McChesney Martin, Jr. Martin restructured the Exchange's Governing Committee and its entire committee system, and paved the way for stricter self-regulation.

After weathering World War II and assisting the federal government in the sale of seven giant defense loans, the NYSE entered the 1950s with a plan to gain the confidence of new investors. In June 1953, the Exchange admitted its first member corporation, Woodcock, Hess & Co., expanding on rules that had limited memberships to partnerships. In January 1954, the Exchange inaugurated a Monthly Payment Plan, in which stocks could be purchased with regular payments. And in February of that year, the push to broaden public ownership fostered a print and radio campaign of public education with the theme: 'Own Your Share of American Business.'

Starting in the 1960s, a virtual revolution in automated data-processing, information, and communication technology effected every level of Exchange activity, from trading practices to regulation and industry-wide organization. In December 1964, the 'black box' ticker was replaced with a 900-character-per-minute model. The old pneumatic tube system was replaced with computer cards. The Market Data System (MDS), completed in December of 1966, used the latest computer technology to integrate the ticker system, the NYSE Common Stock Index and stock-clearing operations. A joint venture between the NYSE and the American Stock Exchange resulted in the 1972 establishment of the Securities Industry Automation Corporation (SIAC), which provided consulting and development services in automated systems for the entire industry. Improved systems utilized by the NYSE also included the 1976 Designated Order Turnaround (DOT) system to electronically route trade information between the Exchange and member firm offices (the improved SuperDOT system followed), and a computerized Stock Watch system to monitor price fluctuations in listed stocks.

Starting in the early 1970s, major organizational changes affected the NYSE and the securities industry at large. In 1970, public ownership of member firms was approved. Then in February of 1971, the Exchange again called on William McChesney Martin, Jr., to overhaul its constitution, rules, and procedures. Changes following Martin's recommendations were numerous: the NYSE was incorporated as a not-for-profit organization; in July 1971, member corporations began listing their stock; alternative listing standards attracted foreign-based corporations, and qualified foreign-based brokers were invited to apply for membership; electronic-access memberships were added to physical memberships to expand broker-dealer participation in NYSE markets; and the fixed commission system was abolished in May 1975. In addition, the Board of Governors was replaced by a Board of Directors in July 1972; by 1993, the Board consisted of 12 public members, 12 industry members, and two NYSE officers, the chair/CEO and the president/chief operating officer.

With the Securities Acts Amendments of 1975, Congress enacted further changes. A full consolidated tape was introduced to electronically collect and report trades in NYSE listed stocks from all markets in which they occurred. The 1978 inauguration of the Intermarket Trading System (ITS) used computers to connect the NYSE to six other stock exchanges: the American, Boston, Cincinnati, Midwest, Pacific, and Philadelphia. A Composite Quotation System and National Clearance and Settlement System enabled brokers to do comparative shopping between different markets. Those markets grew in number to include, among others, the over-the-counter (NASDAQ) market after 1982.

In the 1980s, the NYSE was influenced by three main trends: the rise of options and financial futures markets; the proliferation of non-Exchange instruments such as limited partnerships, penny stocks, and junk bonds; and the surge of computerized information delivery systems, giving industry professionals unprecedented power to manipulate the market in what the press often called 'market games.' The first trend was manifest in the August 7, 1980 opening of the New York Futures Exchange (NYFE). All three trends contributed to a bullish market throughout the early 1980s.

The September 21, 1987, record price of $1.15 million paid for a NYSE membership reflected confidence in the market's strength. Nevertheless, less than six months later the market experienced a sudden downturn. On October 19, 1987, the Dow Jones Industrial Average dropped 508 points, followed a day later by the highest volume day of 608,148,710 shares at the NYSE. In order to reduce record stock-market volume, on October 20 the NYSE curbed the use of its electronic order-delivery system, forcing many traders to turn away orders. The overall turmoil and tremendous loss to investors earned the name 'Black Monday.' The overall crisis became known as the Crash of 1987.

The Crash of 1987 prompted energetic discussion and planning toward regulatory overhaul of the nation's financial industry. While strategies differed, general consensus supported the basic objectives of national market system legislation: fair competition between market participants; economically efficient and fast execution of customer orders; public access to market information; and the opportunities for investors to interact without broker participation. The exact means of arriving at these objectives remained a subject of heated and ongoing debate. One plan proposed a $1 billion superfund, created with capital advanced by large member firms. In a New York Times editorial on October 21, 1987, Lawrence H. Summers suggested that the stock index futures market should be regulated out of existence, as it 'increased market volatility by creating huge selling pressure following market declines.' Edward A. Kwalwasser, executive vice-president of the NYSE Regulatory Group, proposed a general regulatory structure that would apply the same rules to all securities execution systems. He argued that different regulations too often applied to different trading systems.

Indeed, from the 1980s on, the NYSE faced growing competition by off-exchange trading in NYSE-listed securities. Customers were increasingly drawn to so-called third-market firms for several reasons: they had no exchange fees to pay, they outperformed regional exchanges, and they could execute orders at incredible speeds, often within seconds. Yet critics cited important disadvantages as well: third-market firms permitted their brokers/dealers to funnel order flow to sources of liquidity that might undermine the primacy of the investor and the capital raising function. In an April 1993 hearing on the future of the Stock Market, NYSE CEO William Donaldson defended the Exchange against the encroachment of dealer markets. He noted that 'the fragmented nature of dealer markets combined with flexibility in the time a trade can be reported makes trade reporting in the dealer market inherently unreliable.' Praising the NYSE's combination of computer automation with on-floor communication, Donaldson added that 'It's only at the point of sale where we believe that human intelligence and competitiveness must be brought together in executing an order.'

In January 1992, the NYSE began a year-long series of programs and events in observance of its bicentennial. It also continued its fight to retain any further slippage in its market share, adding policies like the 'clean-cross rule' allowing large institutional investors to cross block orders on the floor without interference from smaller public orders. In addition, the NYSE continued to develop international contacts: in November of 1986 it led a Wall Street delegation to China for a symposium on financial markets; in November of 1988 it opened an office in London to facilitate European access to U.S. capital markets; and in October of 1990 the NYSE established an exchange program with the Soviet (now C.I.S.) Ministry of Finance and Gosbank, the state bank.

The long bull market of the 1990s was good for the NYSE, yet the overall growth of the stock market also helped fuel the company's principal competitor, NASDAQ, and promoted many alternative electronic trading systems. These alternative systems (known as ECNs, for electronic communication networks), such as Instinet Corp. and Bloomberg Tradebook, used advanced communication technology to allow institutions to trade among themselves, cutting out the middleman. These were increasingly viewed as low-cost alternatives to traditional trading. By the mid-1990s, the ECNs accounted for close to four percent of orders in securities listed on the NYSE, up from just over one percent in 1991. As for NASDAQ, it was known as the haven of technology stocks, and by and large it was technology that was thought to account for the long season of prosperity in the U.S. stock market. It became increasingly important for the NYSE to distinguish itself from NASDAQ and its competitors, and to sell itself as the best stock exchange. The principal difference between NASDAQ and the NYSE was the floor trading system. NASDAQ did not have the member specialists who tracked each listed stock, but dealt through so-called market makers, who handled all trades electronically. Different market makers might quote different prices for the same stock, depending on their inventory.

In 1995, Richard Grasso became chairman of the NYSE, and he moved swiftly to bolster the exchange against its rivals. The NYSE struggled to woo firms away from NASDAQ, it reached out to companies just going public, and it set its sights on overseas companies. Many firms went to NASDAQ with their initial public offerings (IPOs), because of that exchange's lower bar for capitalization. Under Grasso, the NYSE tried to capture more of the young companies just going public. The NYSE had 74 IPOs in 1995, and increased that number to 117 the next year. This was still slight compared to 730 IPOs on NASDAQ for 1996. In the mid-1990s the NYSE opened an office in Menlo Park, California, near the heart of Silicon Valley, in order to be closer to many of the up-and-coming technology firms. Over the next few years, NYSE made overtures to about 600 companies listed on NASDAQ, hoping to get them to switch. Companies that made the move included the computer company Gateway 2000 and the internet provider America Online, and both NASDAQ and the NYSE competed heavily for new foreign listings. Here too, NASDAQ had a distinct advantage throughout the 1990s because of its less stringent entrance requirements and its reputation as the place for technology sector stocks. However,1 by 1999, the NYSE had 28 new foreign listings, and in 2000 it gained 32 (compared to 63 and 86 for NASDAQ). To make itself more amenable to foreign markets, the NYSE allowed trading in 16ths (instead of only in eighths) in 1997, and by 2001 had phased out fractions, to trade in decimals. The move to decimals brought the NYSE in line with other world stock exchanges. The stock exchange also announced plans to float itself as a public company, perhaps in 1998. However, these plans were put off, apparently because the NYSE had trouble defining its business model.

The NYSE spent heavily on advertising in the late 1990s, doubling its budget from $7 million to $14 million between 1996 and 1997. It tried to build on the prestige of its long history, which again set it apart from NASDAQ and newer electronic competitors. Nevertheless, talk of the moribundity of NYSE, with its antiquated floor-trading system, persisted through the end of the century. The close of 2000, however, saw a collapse of many of the high-flying new technology firms, and the NASDAQ dropped 40 percent. Moreover, the threat of alternative electronic trading sites seemed to be weakening. NYSE's Grasso argued that the proliferation of new trading venues meant a host of new, and usually hidden, middlemen, who didn't always work to the best interests of the investor. The NYSE had a massive weapon against the ECNs, which was its liquidity. It traded a billion shares a day, while even the largest of the ECNs sometimes traded only in the hundreds of shares after hours. In 2000, Grasso announced the NYSE would soon unveil several new electronic trading tools, giving investors on NYSE the same instantaneous trading the electronic communication networks offered. One was called Network NYSE, and it allowed investors to either work with a broker or to send orders electronically directly to the stock exchange. MarkeTrac was a web-based program that represented the NYSE trading floor in real time, showing 'hot spots' of trading activity, and allowing investors to make instantaneous trades. In a sense, NYSE was positioning itself as the best of both worlds--both the staid, old-fashioned, and mighty stock exchange and the quick, cutting-edge, electronic network. Though by early 2001 it was too soon to tell what would happen to the struggling technology sector, it looked like NYSE had not been brought down by its electronic rivals.

Principal Subsidiaries

New York Futures Exchange (NYFE).

Principal Competitors

London Stock Exchange plc; National Association of Securities Dealers Inc. (NASDAQ); Instinet Group LLC; E*Trade Group, LLC.

Further Reading

Anders, George, Cynthia Crossen, and Scott McMurray, 'Big Board Curb on Electronic Trading Results in Halt at Stock-Index Markets,' Wall Street Journal, October 21, 1987, p. 3.

'The Battle for Efficient Markets,' Economist, June 17, 2000, p. 69.

'Can the Big Board Police Itself?' Business Week, November 8, 1999, p. 154.

'Demolition on Wall Street; The NYSE Is Gloomy Because the NYSE Is Gloomy,' Economist, February 4, 1987, p. 81.

'E*Trade Moves to NYSE, So Is Nasdaq Losing Out?' Investment Dealers' Digest, January 29, 2001.

'Excerpt of the Hearing of the Telecommunications and Finance Subcommittee of the House Energy and Commerce Committee,' Federal News Service, April 14, 1993.

Fadiman, Mark, Rebuilding Wall Street, Englewood Cliffs, N.J.: Prentice Hall, 1992.

Feinberg, Andrew, 'Blown Away by Black Monday,' New York Times Magazine, December 20, 1987, pp. 39, 67-71.

Gardner, Deborah S., Marketplace: A Brief History of the New York Stock Exchange, New York: NYSE, 1993.

Jones, Alex S., 'Caution in the Press: Was It Really a `Crash'?' New York Times, October 21, 1987.

Metz, Tim, Black Monday: The Catastrophe of October 19, 1987 and Beyond, New York: William Morrow, 1988.

Schmerken, Ivy, 'Off-Exchange Trading Chips Away at NYSE Volume,' Wall Street & Technology, December 1992, p. 42.

'Stock in a Stock Exchange?' Business Week, September 27, 1999, p. 151.

Summers, Lawrence H., 'In the Wake of Wall Street's Crash,' New York Times, October 21, 1987.

'Text of Testimony Prepared for Delivery by Edward A. Kwalwasser, Executive Vice-President Regulatory Group, NYSE, Before the Telecommunications and Finance Subcommittee of the House Energy and Commerce Committee,' Federal News Service, May 26, 1993.

Vinzant, Carol, 'Wall Street Taking Another Look at Decimals,' Washington Post, February 13, 2001, p. E1.

Wagley, John, 'The Battle for Overseas Listings,' Investment Dealers' Digest, October 2, 2000.

Weinberg, Neil, 'The Big Board Comes Back from the Brink,' Forbes, November 13, 2000, p. 274.

Woolley, Suzanne, 'The Booming Big Board,' Business Week, August 4, 1997, pp. 58-63.

— Kerstan Cohen; Update: A. Woodward

A corporation, operated by a board of directors, responsible for listing securities, setting policies and supervising the stock exchange and its member activities. The NYSE also oversees the transfer of members' seats on the Exchange, judging whether a potential applicant is qualified to be a specialist.

Investopedia Says:
The NYSE uses floor traders (people) to make trades, whereas the Nasdaq and many other exchanges are computer driven.

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Founded in 1792, it is the largest equities marketplace in the world. It is located at 11 Wall Street in New York City; also known as the Big Board and The Exchange. Approximately 2,800 companies worth $20 trillion in global market capitalization are listed on the exchange, a cross section of leading blue chip, mid-size, and small capitalization companies that meet the NYSE's stringent listing requirements. More than 450 non-U.S. Companies valued at nearly $7 trillion are part of the NYSE market. Average daily stock volume is more than $1.6 billion, with an average dollar value of $55 billion. The NYSE also operates an automated bond market offering investors corporate, agency, and government bonds. NYSE-listed equity issuers can list their bonds without charge on the exchange. Corporate debt represents the largest share of NYSE bond volume, with some 85% in nonconvertible bonds and 15% in convertible debt issues.

The NYSE is expanding its position in the trading of Exchange-Traded Funds (ETFs), structured products, and other derivative securities, and in 2005, announced the transfer of 61 iShares ETFs to its market from the American Stock Exchange. The move made the NYSE the largest market for listing iShares ETFs, building on its already-growing base of 19 listed ETFs, including GLD, DVY, TIP and the NYSE-based U.S. 100 and Composite Index funds, NY and NYC. Additionally, Dow Jones Indexes developed and maintains a family of NYSE-branded indices that track the performance of NYSE-listed companies in key market sectors and regions. These indices form the basis for future launches of other tradable products.

The NYSE is a not-for profit corporation governed by a two-tier board: the Board of Directors (BoD), comprised of independent directors and the CEO, and an advisory Board of Executives (BoE) appointed by the Board of Directors to provide guidance on the Exchange's business strategy. The independent Board of Directors, whose individual members have no material connection to any of the NYSE's listed companies, management, or member firms, supervises regulation, governance, compensation, and internal controls. The Board of Executives is composed of constituent representatives who discuss NYSE marketplace operations, membership and listed-company issues, and public issues relating to market structure and performance. The NYSE's governance structure separates its regulatory organization from marketplace operations, with the Chief Regulatory Officer reporting to the Board of Director's Regulatory Oversight and Regulatory Budget Committee-not the NYSE CEO. Staff groups handle specialized functions, such as trading technology and operations, liaison with listed companies and member firms, government relations, and economic research. Certain operational functions are handled by affiliated corporations, such as Depository Trust Company, National Securities Clearing Corporation (NSCC), and Securities Industry Automation Corporation (SIAC). Total voting membership is currently fixed at 1,366 "seats," which are owned by individuals, usually partners or officers of securities firms. The number of firms represented is over 400, seven of which are specialist firms responsible for the maintenance of an orderly market in the securities they handle. Most members execute orders for the public, although a small number-called registered competitive market makers-deal exclusively for their own accounts.

In 2005, the NYSE announced plans to acquire electronic stock exchange operator Archipelago Holdings Inc. And become a publicly held company, to be known as NYSE Group Inc. This will enable the public to own shares in the combined group, which will be a diverse platform for trading of listed and over-the-counter securities, options, and other products, including derivatives. Trading hours: 9:30 A.M. To 4 P.M. Followed by after-hours automated Crossing Sessions, Monday through Friday. www.nyse.com. See also Securities and Commodities Exchanges.

The oldest organized stock exchange in the United States, which has been active since its organization in establishing listing requirements for companies whose stocks are traded on the Exchange and in encouraging accurate and timely disclosure of listed company income statement and balance sheet results. See American Stock Exchange.

A stock exchange in the United States, located on Wall Street in New York City. Traditionally the largest exchange, it was surpassed in annual share volume during the 1990s by NASDAQ.

This article is about the stock exchange itself. For its parent company, see NYSE Euronext.

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New York Stock Exchange
Type	Stock exchange
Location	New York City, New York, United States
Owner	NYSE Euronext
Key people	Duncan L. Niederauer (CEO)
Currency	United States dollar
No. of listings	2,773
MarketCap	US$10.8 trillion (2009)
Volume	US$22 trillion (2006)
Indexes	NYSE Composite Dow Jones Industrial Average
Website	www.nyse.com
New York Stock Exchange
U.S. National Register of Historic Places
U.S. National Historic Landmark
Front Elevation of New York Stock Exchange
Coordinates:	40°42′24.6″N 74°0′39.7″W / 40.706833°N 74.011028°W / 40.706833; -74.011028Coordinates: 40°42′24.6″N 74°0′39.7″W / 40.706833°N 74.011028°W / 40.706833; -74.011028
Built/Founded:	1903
Architect:	Trowbridge & Livingston; George B. Post
Architectural style(s):	Classical Revival
Governing body:	Private
Added to NRHP:	June 2, 1978[1]
Designated NHL:	June 2, 1978[2]
NRHP Reference#:	78001877

The New York Stock Exchange (NYSE) is a stock exchange located at 11 Wall Street in lower Manhattan, New York City, New York, USA. It is the largest stock exchange in the world by United States dollar value of its listed companies' securities.^[3] As of October 2008, the combined capitalization of all domestic NYSE listed companies was US$10.1 trillion.^[4]

The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007 merger with the fully-electronic stock exchange Euronext. The NYSE trading floor is located at 11 Wall Street and is composed of four rooms used for the facilitation of trading. A fifth trading room, located at 30 Broad Street, was closed in February 2007. The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978,^[5] as was the 11 Wall Street building.^[2][6][7]

Contents 1 History 1.1 Events 2 Trading 2.1 NYSE Composite Index 2.2 Timeline 3 See also 4 References 5 Bibliography 6 External links

History

The Stock Exchange at 10-12 Broad street, in 1882

The origin of the NYSE can be traced to May 17, 1792, when the Buttonwood Agreement was signed by 24 stock brokers outside of 68 Wall Street in New York under a buttonwood tree on Wall Street. On March 8, 1817, the organization drafted a constitution and renamed itself the "New York Stock & Exchange Board". Anthony Stockholm was elected the Exchange's first president (for other presidents, see List of presidents of the New York Stock Exchange).

The first central location of the Exchange was a room, rented in 1817 for $200 a month, located at 40 Wall Street. After that location was destroyed in the Great Fire of New York (1835), the Exchange moved to a temporary headquarters. In 1863, the New York Stock & Exchange Board changed to its current name, the New York Stock Exchange. In 1865, the Exchange moved to 10-12 Broad Street.

The volume of stocks traded increased sixfold in the years between 1896 and 1901, and a larger space was required to conduct business in the expanding marketplace.^[8] Eight New York City architects were invited to participate in a design competition for a new building; ultimately, the Exchange selected the neoclassic design submitted by architect George B. Post. Demolition of the Exchange building at 10 Broad Street, and adjacent buildings, started on May 10, 1901.

The new building, located at 18 Broad Street, cost $4 million and opened on April 22, 1903. The trading floor, at 109 x 140 feet (33 x 42.5 m), was one of the largest volumes of space in the city at the time, and had a skylight set into a 72-foot (22 m)-high ceiling. The main façade of the building features six tall Corinthian capitals, topped by a marble sculpture by John Quincy Adams Ward, called “Integrity Protecting the Works of Man”. The building was listed as a National Historic Landmark and added to the National Register of Historic Places on June 2, 1978.^[9]

In 1922, a building for offices, designed by Trowbridge & Livingston, was added at 11 Broad Street, as well as a new trading floor called the Garage. Additional trading floor space was added in 1969 the Blue Room, and in 1988 the EBR or Extended Blue Room, with the latest technology for information display and communication. Yet another trading floor was opened at 30 Broad Street called the Bond Room in 2000. As the NYSE introduced its hybrid market, a greater proportion of trading came to be executed electronically, and due to the resulting reduction in demand for trading floor space, the NYSE decided to close the 30 Broad Street trading room in early 2006. As the adoption of electronic trading continued to reduce the number of traders and employees on the floor, in late 2007, the NYSE closed the rooms created by the 1969 and 1988 expansions.

The Stock Exchange Luncheon Club was situated on the seventh floor from 1898 until its closure in 2006. ^[10]

The floor of the New York Stock Exchange in 1908

The NYSE announced its plans to acquire Archipelago on April 21, 2005, in a deal intended to reorganize the NYSE as a publicly traded company. NYSE's governing board voted to acquire rival Archipelago on December 6, 2005, and become a for-profit, public company. It began trading under the name NYSE Group on March 8, 2006. A little over one year later, on April 4, 2007, the NYSE Group completed its merger with Euronext, the European combined stock market, thus forming the NYSE Euronext, the first transatlantic stock exchange.

Presently, Marsh Carter is Chairman of the New York Stock Exchange, having succeeded John S. Reed and the CEO is Duncan Niederauer, having succeeded John Thain.

Events

See also: Black Monday (1987), October 27, 1997 mini-crash, and Friday the 13th mini-crash

The exchange was closed shortly after the beginning of World War I (July 31, 1914), but it partially re-opened on November 28 of that year in order to help the war effort by trading bonds, and completely reopened for stock trading in mid-December.

On September 16, 1920, a bomb exploded on Wall Street outside the NYSE building, killing 33 people and injuring more than 400. The perpetrators were never found. The NYSE building and some buildings nearby, such as the JP Morgan building, still have marks on their facades caused by the bombing.

The Black Thursday crash of the Exchange on October 24, 1929, and the sell-off panic which started on Black Tuesday, October 29, are often blamed for precipitating the Great Depression of 1929. In an effort to try to restore investor confidence, the Exchange unveiled a fifteen-point program aimed to upgrade protection for the investing public on October 31, 1938.

On October 1, 1934, the exchange was registered as a national securities exchange with the U.S. Securities and Exchange Commission, with a president and a thirty-three member board. On February 18, 1971 the non-profit corporation was formed, and the number of board members was reduced to twenty-five.

One of Abbie Hoffman's well-known protests took place on August 24, 1967, when he led members of the Yippie movement to the gallery of the New York Stock Exchange (NYSE). The protesters threw fistfuls of dollars (most of the bills were fake) down to the traders below, some of whom booed, while others began to scramble frantically to grab the money as fast as they could^{[citation needed]}. Hoffman claimed to be pointing out that, metaphorically, that's what NYSE traders "were already doing." "We didn't call the press," wrote Hoffman, "at that time we really had no notion of anything called a media event." The press was quick to respond and by evening the event was reported around the world. Since that incident, the stock exchange has spent $20,000 to enclose the gallery with bulletproof glass.

NYSE's stock exchange traders floor before the introduction of electronic readouts and computer screens

On October 19, 1987, the Dow Jones Industrial Average (DJIA) dropped 508 points, a 22.6% loss in a single day, the second-biggest one-day drop the exchange had experienced, prompting officials at the exchange to invoke for the first time the "circuit breaker" rule to halt all trading. This was a very controversial move and led to a quick change in the rule; trading now halts for an hour, two hours, or the rest of the day when the DJIA drops 10, 20, or 30 percent, respectively. In the afternoon, the 10% and 20% drops will halt trading for a shorter period of time, but a 30% drop will always close the exchange for the day. The rationale behind the trading halt was to give investors a chance to cool off and reevaluate their positions. Black Monday was followed by Terrible Tuesday, a day in which the Exchange's systems did not perform well and some people had difficulty completing their trades.

Consequently, there would be another major drop for the Dow on October 13, 1989; the Mini-Crash of 1989. The crash was apparently caused by a reaction to a news story of a $6.75 billion leveraged buyout deal for UAL Corporation, the parent company of United Airlines, which broke down. When the UAL deal fell through, it helped trigger the collapse of the junk bond market causing the Dow to fall 190.58 points, or 6.91 percent.

Similarly, there was a panic in the financial world during the year of 1997; the Asian Financial Crisis. Like the fall of many foreign markets, the Dow suffered a 7.18% drop in value (554.26 points) on October 27, 1997, in what later became known as the 1997 Mini-Crash but from which the DJIA recovered quickly.

On January 26, 2000, an altercation during filming of the music video for Sleep Now in the Fire, which was directed by Michael Moore, caused the doors of the exchange to be closed and the band, Rage Against the Machine, to be escorted from the site by security,^[11] after band members attempted to gain entry into the exchange.^[12] Trading on the exchange floor, however, continued uninterrupted.^[13]

Trading

U.S. Secretary of Commerce Donald L. Evans rings the opening bell at the NYSE on April 23, 2003. Former chairman Jack Womack is also in this picture.

The New York Stock Exchange (sometimes referred to as "the Big Board") provides a means for buyers and sellers to trade shares of stock in companies registered for public trading. The NYSE is open for trading Monday through Friday between 9:30am – 4:00pm ET, with the exception of holidays declared by the Exchange in advance.

On the trading floor, the NYSE trades in a continuous auction format, where traders can execute stock transactions on behalf of investors. They will gather around the appropriate post where a specialist broker, who is employed by an 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 (approximately 10% of the time) facilitate the trades by committing their own capital and as a matter of course disseminate information to the crowd that helps to bring buyers and sellers together.

As of January 24, 2007, all NYSE stocks can be traded via its electronic Hybrid Market (except for a small group of very high-priced stocks). Customers can now send orders for immediate electronic execution, or route orders to the floor for trade in the auction market. In the first three months of 2007, in excess of 82% of all order volume was delivered to the floor electronically.^[14]

The NYSE trading floor on August 2008

The right to directly trade shares on the exchange is conferred upon owners of the 1366 "seats". The term comes from the fact that up until the 1870s NYSE members sat in chairs to trade. In 1868, the number of seats was fixed at 533, and this number was increased several times over the years. In 1953, the exchange stopped at 1366 seats. These seats are a sought-after commodity as they confer the ability to directly trade stock on the NYSE. Seat prices have varied widely over the years, generally falling during recessions and rising during economic expansions. The most expensive inflation-adjusted seat was sold in 1929 for $625,000, which, today, would be over six million dollars. In recent times, seats have sold for as high as $4 million in the late 1990s and $1 million in 2001. In 2005, seat prices shot up to $3.25 million as the exchange was set to merge with Archipelago and become a for-profit, publicly traded company. Seat owners received $500,000 cash per seat and 77,000 shares of the newly formed corporation. The NYSE now sells one-year licenses to trade directly on the exchange.

NYSE Composite Index

In the mid-1960s, the NYSE Composite Index (NYSE: NYA) was created, with a base value of 50 points equal to the 1965 yearly close. This was done to reflect the value of all stocks trading at the exchange instead of just the 30 stocks included in the Dow Jones Industrial Average. To raise the profile of the composite index, in 2003 the NYSE set its new base value of 5,000 points equal to the 2002 yearly close.

Timeline

This article is in a list format that may be better presented using prose. You can help by converting this article to prose, if appropriate. Editing help is available. (September 2009)

The NYSE at Christmas time (December 2008)

• 1792 - The NYSE acquires its first traded securities [2] [3]
• 1817 - The constitution of the New York Stock and Exchange Board is adopted [4]
• 1867 - The First Stock Ticker [5]
• 1896 - Dow Jones Industrial Average first published in The Wall Street Journal [6]
• 1903 - NYSE moves into new quarters at 18 Broad Street
• 1906 - Dow exceeds 100 on January 12
• 1907 - Panic of 1907
• 1914 - World War I causes the longest exchange shutdown: four months, two weeks; re-opening December 12 brings the largest one-day percentage drop in the DJIA (24.4%)
• 1915 - Market price is given in dollars
• 1929 - Central quote system established; Black Thursday, October 24 and Black Tuesday, October 29 signal the end of the Roaring Twenties bull market
• 1943 - Trading floor is opened to women^[15]
• 1949 - Longest (eight-year) bull market begins [7]
• 1954 - Dow surpasses its 1929 peak in inflation-adjusted dollars
• 1956 - Dow closes above 500 for the first time on March 12
• 1966 - NYSE creates the Common Stock Index; floor data fully automated lli[8]
• 1967 - Protesters led by Abbie Hoffman throw mostly fake dollar bills at traders from gallery, leading to the installation of bullet-proof glass
• 1970 - Securities Investor Protection Corporation established
• 1971 - NYSE recognized as Not-for-Profit organization [9]
• 1972 - Dow closes above 1,000 for the first time on November 14
• 1977 - Foreign brokers are admitted to NYSE
• 1979 - New York Futures Exchange established
• 1982 - Longest bull market in DJIA history begins
• 1987 - Black Monday, October 19, sees the second-largest one-day DJIA percentage drop (22.6%) in history
• 1991 - Dow exceeds 3,000
• 1995 - Dow exceeds 5,000
• 1996 - Real-time ticker introduced [10]
• 1999 - Dow exceeds 10,000 on March 29
• 2000 - Dow peaks at 11,722.98 on January 14; first NYSE global index is launched under the ticker NYIID

Security after the September 11 attacks

• 2001 - Trading in fractions (n/16) ends, replaced by decimals (increments of $.01, see Decimalisation); September 11, 2001 attacks occur, closing NYSE for 4 sessions
• 2003 - NYSE Composite Index relaunched and value set equal to 5,000 points
• 2006 - NYSE and ArcaEx merge, creating NYSE Arca and forming the publicly owned, for-profit NYSE Group, Inc.; in turn, NYSE Group merges with Euronext, creating the first trans-Atlantic stock exchange group; DJIA tops 12,000 on October 19
• 2007 - US President George W. Bush shows up unannounced to the Floor about an hour and a half before a Federal Open Market Committee interest-rate decision on January 31.^[16] NYSE announces its merger with the American Stock Exchange; NYSE Composite closes above 10,000 on June 1; DJIA exceeds 14,000 on July 19 and closes at a peak of 14,164.53 on October 9. This was the peak or the early-mid 2000s boom before the 2008-2009 bust.
• 2008 - On September 15, the DJIA loses more than 500 points amid fears of bank failures, resulting in a permanent prohibition of naked short selling and a three-week temporary ban on all short selling of financial stocks; in spite of this, record volatility continues for the next two months, culminating at 5 1/2-year market lows.
• 2009 - Dow returns to 10,000
• 2009 - NYSE General Counsel Senior V.P. Janet K Parkhurst issues cease and desist letter to Wall Street Prison Consultants founder Larry Jay Levine stating Levine's inferences to the NYSE and crime on his website tarnishes the NYSE name and image.

See also

New York City portal

• Economy of New York City
• List of American stock exchanges

References

1. ^ "National Register Information System". National Register of Historic Places. National Park Service. 2007-01-23. http://www.nr.nps.gov/. 
2. ^ ^{a b} "New York Stock Exchange". National Historic Landmark summary listing. National Park Service. 2007-09-17. http://tps.cr.nps.gov/nhl/detail.cfm?ResourceId=1776&ResourceType=Building. 
3. ^ [1]
4. ^ http://www.nyxdata.com/nysedata/default.aspx?tabid=115
5. ^ National Park Service, National Historic Landmarks Survey, New York, retrieved May 31, 2007.
6. ^ George R. Adams (March 1977). "New York Stock Exchange National Register of Historic Places Inventory-Nomination (1MB PDF)" (PDF). National Park Service. http://pdfhost.focus.nps.gov/docs/NHLS/Text/78001877.pdf. Retrieved 2008-01-30. 
7. ^ "National Register of Historic Places Inventory-Nomination (1MB PDF)" (PDF). National Park Service. 1983. http://pdfhost.focus.nps.gov/docs/NHLS/Photos/78001877.pdf. 
8. ^ The Building NYSE Group history
9. ^ National Register Number: 78001877 National Historic Landmark
10. ^ "Where Wall Street Meets to Eat, the Last Lunch". New York Times. 2006-04-28. http://www.nytimes.com/2006/04/28/business/28lunch.html?_r=1. Retrieved 2009-01-29. 
11. ^ "Rage against Wall Street". Green Left Weekly #397. March 15, 2000. http://www.greenleft.org.au/2000/397/24186. Retrieved 2007-10-11. 
12. ^ Basham, David (January 28, 2000). "Rage Against the Machine Shoots New Video With Michael Moore". MTV News. http://www.mtv.com/news/articles/1433553/20000128/rage_against_the_machine.jhtml. Retrieved 2007-02-17. 
13. ^ ""New York Stock Exchange Special Closings", 1885-date" (PDF). NYSE Group. http://www.nyse.com/pdfs/closings.pdf. Retrieved 2007-04-07. 
14. ^ Shell, Adam (2007-07-12), "Technology squeezes out real, live traders", USA Today, http://www.usatoday.com/money/markets/2007-07-11-nyse-traders_N.htm 
15. ^ NYSE: Timeline"
16. ^ Katy Byron (2007-01-31). "President Bush makes surprise visit to NYSE". CNN Money (Cable News Network). http://money.cnn.com/2007/01/31/news/newsmakers/markets_bush/index.htm?postversion=2007013115. Retrieved 2007-02-20. 

Bibliography

• Buck, James E. (1992). The New York Stock Exchange: The First 200 Years. Greenwich Pub. Group. ISBN 0944641024. 
• Geisst, Charles R. (2004). Wall Street: A History - From its Beginnings to the Fall of Enron. Oxford University Press. ISBN 0195170601. 
• Kent, Zachary (1990). The Story of the New York Stock Exchange. Scholastic Library Pub.. ISBN 0516047485. 
• Sloane, Leonard (1980). The Anatomy of the Floor. Doubleday. ISBN 0385122497. 
• Sobel, Robert (1975). N.Y.S.E.: A History of the New York Stock Exchange, 1935-1975. Weybright and Talley. ISBN 0679401245. 

External links

Wikimedia Commons has media related to: New York Stock Exchange

• New York Stock Exchange website
• Price of membership and a seat

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