The New York Stock Exchange (NYSE) is the world’s largest securities exchange. As its name implies, it provides a marketplace for buying and selling 8,000 corporate stocks and other securities. It lists 82% of the S&P 500, 90% of the Dow Jones Industrial Average, and 70 of the world's largest corporations. It is, itself, a publicly-traded company (ticker symbol NYSE:NYS) with nearly 3,000 employees.
NYSE Bought by ICEOn June 3, 2013, the NYSE shareholders approved its $8.2 billion purchase by IntercontinentalExchange (ICE). This would merge the energy and commodity futures exchange with the NYSE. It is expected to be approved by regulators later this year. (Source: Marketwatch, NYSE Shareholders Approve ICE Merger, June 3, 2013)
NYSE EuronextIn 2007, the NYSE merged with Euronext. It now has the capacity to trade up to 10 billion shares per day. The move combined the NYSE with the five major European exchanges, including the Paris Bourse, Amsterdam, London (the London International Financial Futures Exchange, or Liffe), Brussels and Lisbon. In 2008, the NYSE acquired the American Stock Exchange (AMEX), focusing on small cap companies. The NYSE Euronext also operates three other exchanges:
- NYSE Arca, an all-electronic stock exchange trading securities, mutual funds and options.
- ArcaEdge, the exchange for over-the-counter (OTC) stocks.
- NYSE Liffe, trading more than 2,000 electronic options and futures contracts for gold and other commodities. It also trades MSCI-based futures contracts.
- NYSE Bonds, an all electronic exchange that trades (you guessed it) bonds.
How the NYSE WorksThe New York Stock Exchange uses brokers to actively trade stocks on the floor. Buyers and sellers auction securities for the highest price. Brokers and dealers must get approved by the NYSE and hold a trading license.
Brokers represent the entity buying the stock, whether it's for a retail brokerage company or institutional investors such as pension funds. The brokers set the "bid" price, which is the price you're willing to pay for the stock. When your stockbroker executes your order to sell, it is not completed until one of the dealers on the floor of the New York Stock Exchange finds another broker to buy it.
The dealers match up the brokers with the stock sellers, who submit an "ask" price. This is usually higher than the bid price. In this way, it's like selling a home. The dealer is like the real estate agent, who puts the buyer and seller together. Dealers get to pocket the difference between the ask and bid price (minus fees and expenses) for their troubles.
Even though a lot of stock transactions occur on the floor with brokers and dealers, most of the 10 billion transactions occur electronically. Even the brokers and dealers get their information and trade electronically. (Source: NYSE: How Exchanges Operate; About.com Guide to Stocks, Trading Basics)
NYSE HoursThe opening bell of the NYSE rings at 9:30 ET, while the closing bell rings at 4 pm ET. This tradition began in 1870 with a Chinese gong. In 1903, when the NYSE moved to its current location, it switched to brass bells. Since these hours are on East Coast time, that means financial advisers on the West Coast have to start their day at 6:30 am in the summer. (Source: NYSE History)
The NYSE uses the opening and closing bells to celebrate a New York City or financially-related event. It's considered an honor to be invited to ring it. For example, if a company has just issued an Initial Public Offering (IPO) with the NYSE, that firm's CEO or President of the Board gets to ring the NYSE bell. To find out who is ringing the opening or closing bell in the next few days, see NYSE Upcoming Events.