New York Stock Exchange

1
New York Stock Exchange

• Economics 521
• Elisa Claire Weaver

2
Stock Market

• Owning stock means you own a slice of a public
  company.
• When a company needs to raise money to expand, it
  sells stocks or bonds to the public through the
  financial markets.
• Individuals become investors in this company by
  purchasing those securities.
• Central to this activity is the NYSE marketplace,
  where billions of dollars worth of stock change
  hands each day.

3
New York Stock Exchange

• Largest stock exchange in the world by dollar
  volume
• Second largest by number of companies
• Global capitalization of 23 trillion as of
  September 30, 2006
• Founded on March 8, 1817

4
History

• May 17, 1792 - Buttonwood Agreement
• Signed by 24 stock brokers
• Two provisions
• The brokers were to deal only with each other.
  Thereby eliminating the auctioneers, and
• The commissions were to be .25.
• March 8, 1817 - drafted constitution, named
  itself the "New York Stock Exchange Board".
• In 1863, this name was shortened to its modern
  form, "New York Stock Exchange".
• Anthony Stockholm was elected as the first
  president

5
Membership

• Until recently, members could only join by
  purchasing existing seats, which were limited to
  a total of 1,366.
• In December of 2005, the NYSE went both
  electronic and public, by merging with the
  already publicly traded Archipelago electronic
  stock exchange.
• The new merged company is called the NYSE Group,
  Inc., and the seats of the NYSE translated into
  shares of stock which are now traded under the
  ticker symbol NYX.

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Continuous Auction Format

• Prior to the 2005 merger, there was one specific
  location on the trading floor where each listed
  stock traded
• This human interaction differentiates the NYSE
  from fully electronic markets
• Recently adopted a hybrid market structure

7
NYSE Composite Index

• Created in the mid-1960s to reflect the value of
  all stocks traded, not just the 30 stocks in the
  Dow Jones Industrial Average
• Base value was 50 points equal to the 1965 yearly
  close
• 2003 new base value of 5,000 equal to the 2002
  yearly close
• Lifetime high 9,188.17 - Dec 28, 2006
• Lifetime low 347.77 - October 1974

8
Chronology

• 1792 - The first traded company on the NYSE
• 1817 - Rules and a Constitution - The New York
  Stock and Exchange Board
• 1867 - The First Stock Ticker
• 1896 - DJIA published by The Wall Street Journal
• 1903 - NYSE moves into its new quarters at 18
  Broad Street
• 1907 - Panic of 1907
• 1914 - World War I causes longest exchange
  shutdown
• 1915 - Market price in
• 1929 - Central Quote System
• 1929 - Black Thursday (10/24) and Black Tuesday
  (10/29)
• 1943 - Women Work on Trading Floor
• 1949 - Longest Bull Run begins
• 1954 - Dow surpasses 1929 peak
• 1966 - NYSE creates Common Stock Index
• 1966 - Floor data fully automated
• 1970 - Securities Investor Protection Corporation
  established
• 1971 - NYSE Not-for-Profit

• 1972 - DJIA Closes Over 1,000
• 1977 - Foreign Brokers/Dealers are admitted
• 1979 - New York Futures Exchange established
• 1985 - Ronald Reagan visits NYSE
• 1987 - Largest One-Day Percentage Drop of DJIA
  (Black Monday, 19 October)
• 1991 - Dow exceeds 3,000
• 1992 - NYSE celebrates its Bicentennial
• 1996 - Real-time Ticker introduced
• 1999 - DJIA tops 10,000
• 2000 - First Global Index Launches
• 2001 - Trading in Fractions (n/16) ends, replaced
  by decimals (decimalisation)
• 2001 - Terrorist Attacks on World Trade Center
  (September 11) NYSE closed for 4 session days
• 2003 - NYSE Composite Index relaunched
• 2006 - NYSE and ArcaEx merge - NYSE Group, Inc.
  For-profit, publicly owned company
• 2006 - NYSE Group buys Euronext, creating the
  first trans-Atlantic stock exchange group