The New York Stock Exchange - What is It?

When the United States of America were newly founded, a small group of people founded the New York Stock Exchange, at its first home at 68 Wall Street. The Button Wood Agreement was signed in 1792, followed by the first trading. The name of the agreement was taken from the button wood trees which were growing nearby. Back then, public meetings were held in places such as coffee houses, and the earliest trading involved just twenty-four stockbrokers.

These 24 stockbrokers were at that time only allowed to trade with each other, and a commission of 0.25% was charged for each trade; the only stocks traded were bank stocks and government bonds. According to the Button Wood Agreement companies could also be traded, and the first company which was traded on the new stock market was the Bank of New York.

In 1817 the Button Wood Agreement was formalized, and later the New York Stock and Exchange Board was founded as a result. The first president of the board was Anthony Stockholm, and there were thirty stocks traded at that time. The president had the responsibility of naming which stocks members of the board would bid on. There were 533 seats on the board in 1868, compared to 1366 seats today.

The New York Stock Exchange is open every day of the year, and has always done so with two exceptions. These were a period of a few days following the beginning of World War I, and following the terrorist attacks on the World Trade Centre in 2001.

In 2005 the New York Stock Exchange purchased a trading group known as Archipelago, through which it acquired a new function as a business operated for profit. Businesses are offered annual licenses, not board seats, which permit them to deal with the Exchange.

These days countries from all parts of the globe, some fifty in number, trade around 3000 stocks via the New York Stock Exchange, the largest stock market in the world. The New York Stock Exchange allows buyers and sellers to come together to trade. The exchange provides price discovery in an auction environment designed to produce the fairest price for both parties.

On the trading floor, the New York Stock Exchange [NYSE] continues to trade in an auction format. which differentiates it from fully electronic markets. There is one specific location on the trading floor where each listed stock trades. Exchange members interested in buying and selling a particular stock on behalf of investors gather around the appropriate post where a specialist broker, who is not employed by NYSE, but member firms acts as an auctioneer in an open outcry auction market environment to bring buyers and sellers together. It is this frenzied action that has been the subject of several movies, including Wall Street. Other industries also look at these auctioneers to see how they deal with stressful situations and what can be learned from them.

Alexander West holds the Financial Planning Certificate. One of his passions is learning and teaching people about finances. Read the rest of this article at [http://www.thesavvytrader.com/new-york-stock-exchange.php]