How the new York Stock Exchange Operates

The New York Stock Exchange (NYSE) is a primary listing markets where corporate stocks are primarily or formally listed. Established in 1817 under the name the New York Stock and Exchange Board, the exchanged was founded when Buttonwood Agreement was signed in 1792 by twenty four brokers. It was renamed the New York Stock Exchange in 1863.

New York Stock Exchange is the largest organized securities market in the United States. NYSE is a physical location exchange with own building, a limited number of members and an elected governing body. Although the trading happens with members standing, there 1,366 so called seats, which are bought and sold and give the holder the right to trade on the exchange. Approximately 2,750 companies have stock issues listed in NYSE, for a total of about 3,000 stock issues, both common and preferred, reaching a combined capitalization of $25.0 trillion.

The listing requirements for NYSE include a pre-tax income of $2,500,000 the last year and $2,000,000 the last two years, 1,100,000 publicly held shares with a market value of $100,000,000, while the minimum number of holders of round lots (100 shares or more) should be 2,200.

The average number of shares traded daily on the New York Stock Exchange has increased steadily and substantially. Prior to 1960, the daily traded volume averaged less than 3 million shares, while in 2006 it exceeded 1.7 billion shares. In terms of trading volume, the New York Stock Exchange has dominated all other stock exchanges in the United States, such as the National Association of Securities Dealers Automated Quotation System (NASDAQ) and the American Stock Exchange (AMEX). This is basically attributed to its stringent listing requirements and its prestige, which attract most of the largest and best known U.S. companies to be listed on NYSE.

Being a modified auction market, where buyers and sellers trade securities of listed companies, the New York Stock Exchange offers to its members a large room equipped with electronic equipment that enables each member to communicate with the firm’s offices throughout the country. Institutional investors, mutual funds and pension funds are provided with special facilities in order to facilitate the selling of large blocks of stock without depressing their prices. In fact, brokerage houses, which cater to institutional investors, purchase blocks of 10,000 shares of more and resell the security to other institutions or individuals.

NYSE is open on all normal working days, from 09:30am to 4:00pm Eastern Time. In particular the timetable for trading on the New York Stock Exchange includes the Pre-Opening session (03:30am – 4:00am), the Opening Session (04:00am – 09:30am), the Opening Auction (04:00am – 09:28am), the Market Order Freeze Period (09:28am 09:30am), the Core Trading Session (09:30am – 4:00pm), the Closing Auction Freeze (3:58pm – 4:00pm), the Closing Auction Run (4:00pm), the Extended Hours (4:00pm 8:00pm) and the Limit Orders Cancelled (8:00pm).