Understanding the New York Stock Exchange
The New York Stock Exchange (NYSE) is famous for many reasons. Firstly, it has featured in various Hollywood movies that were about the stock market. Secondly, it is the most popular stock market and the largest in the world topping the likes of NASDAQ. Close to 10 million corporate stocks and bonds are traded on the NYSE per day with an average daily trading value of over $160 billion. It also hosts about 70 of the biggest corporations globally and most of the corporations listed on the S&P 500.
The History of the New York Stock Exchange
The NYSE was founded in 1792 with the signing of the Buttonwood Agreement and was known as the New York Stock and Exchange Board. It attained the name the New York Stock exchange in 1863. It is sometimes referred to as the Big Board. It later became a non-profit corporation in 1971 around the time when the NASDAQ was founded. Finally, the NYSE became a publicly traded corporation in 2006. The NYSE now belongs to the Intercontinental Exchange, an American holding company that purchased it for over $8 billion.
The NYSE is the world’s largest stock exchange by market capitalization and is situated on Wall Street, in the financial district of Lower Manhattan, New York City. It is also easily the busiest and by many counts, the most important financial market in the world.
How is Trading Done on the Exchange
Before the formation of the NYSE, security trading was conducted by intermediaries named auctioneers, who also traded staples and tobacco. The Buttonwood Agreement formalized trading with commissions and corporate agreements pertaining to trading. They mostly dealt in War bonds and government-backed bonds.
Currently, the NYSE trades publicly available shares and stocks. It is open on weekdays from 9:30 am to 4:00 pm. There are still auctioneers, usually a specialist broker who facilitates the trading of the stocks. The exchange is traded electronically, however, the famous trading floor is still active leaving investors with the option of sending orders electronically or to the trading floor.
To signal the start and end of trading days, the NYSE uses a brass bell. This has changed from a gavel when it was founded to a Chinese Gong around a century later.
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How Do I Trade on the NYSE?
For a while, to directly trade shares on the NYSE, you have to own a “seat”. The seats come at a cost (as high as $3.25 million per seat in 2005) but seat owners were referred to as members of the NYSE and entitled to trade and earn some returns. Currently, to directly trade on the NYSE called floor trading, licenses are issued for about $40,000 and you can also buy a license for a bond for about $1,000. You can also use investment applications that have been licensed to buy and sell stocks listed on the NYSE, InvestSika lets you do that easily with your mobile money.
What is the NYSE Composite Index?
It is a stock market index that uses free-flat market cap weighting, averaging all common stocks listed on the NYSE. It includes foreign stocks, American depositary receipts, and domestic stocks. This amounts to over 2,000 stocks with a significant number being foreign stocks. The NYSE composite has outperformed significant composites like the NASDAQ composite, the S&P 500, and even the Dow Jones Industrial Average. You can utilize the overall index or find separate indexes for special areas.
Wrapping up
The NYSE is the largest and most popular stock market exchange. With diligent knowledge of the stock exchange, the potential for returns is huge when you make a wise investment. InvestSika lets you buy shares of companies that are publicly listed on local and global stock markets like NYSE and NASDAQ easily using your mobile money in just three clicks. Join SikaTribe to learn more about financial freedom through investments.
