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There are several exchanges in the world where traders – or any willing buyer and seller, really – come together to exchange financial assets.
The Nasdaq is a well-known exchange, as is the Intercontinental Exchange, or ICE.
As it happens, the ICE currently owns the exchange this article will focus on – the New York Stock Exchange (NYSE).
Not only does it offer a hugely colorful history, but it also brings to mind the quintessential example of what a stock exchange is supposed to be.
We’ll wade through the details and provide you with the knowledge you need to understand what it is and how it all works.
What Is the New York Stock Exchange?
The New York Stock Exchange (NYSE) is the largest equity stock exchange in the world.
Companies list their stocks with the exchange so that investors can buy and sell shares in the company with relative ease.
Companies listing with the NYSE enjoy higher liquidity and many other benefits over not offering shares publicly.
How Does the NYSE Work?
As mentioned, companies list their stock on the NYSE so that investors can buy and sell shares in their company.
Each company is required to offer a minimum number of publicly traded shares. It allows these companies to raise huge sums of capital far quicker than ever before to purchase equipment or other capital and grow the company.
While the NYSE may not have the most companies listed (that would be the Nasdaq), it is the largest stock exchange in the world by market capitalization.
The market capitalization of all the companies listed on the NYSE amounts to over $24 trillion.
With 24 rooms where trading occurs, the trading floors bring together banks, brokerages, investment firms, and hedge funds to buy and sell shares every day, beginning at the famed opening bell.
NYSE Listing Requirements
For a company to list its stock on the NYSE, it must meet certain requirements.
This provides a level of safety for investors, so they know a company listed on the NYSE comes with at least a proven history of profitability.
Each company must:
- Have at least 400 shareholders
- Offer at least 1.1 million publicly traded shares
- Have a share price of at least $4, and
- Have a market value of all publicly held shares of at least $40 million
Companies already listed must also maintain at least $10 million in revenue within the previous three years and meet or exceed a total market capitalization of $200 million.
NYSE Hours of Operation
The opening bell rings at 9:30 AM at the 18 Broad Street location and the 11 Wall Street Location in New York City, and the closing bell rings at 4:00 PM every Monday through Friday.
History of the New York Stock Exchange (NYSE)
The stock exchange didn’t always open with a bell.
It was originally opened with a gavel beginning with the creation of the NYSE on May 17, 1792.
24 stockbrokers came together to create the exchange, where only five stocks were traded.
Companies came to list their stock, and the exchange grew.
The oldest listed stock on the NYSE is Consolidated Edison (formerly New York Gas Light Company), which came along in 1824.
The opening gavel became an opening gong in the 1800s but finally became the famous opening bell in 1903.
As the NYSE grew, it merged with other exchanges such as the Euronext in Europe and the American Stock Exchange to become the largest in the world.
What Is the Purpose of the NYSE?
The NYSE provides companies with a way to raise capital very quickly.
It also provides investment companies and brokerages to buy and sell shares in companies to create portfolios for investors.
While the trading floors still see activity, the NYSE has had to improve its digital offerings to maintain competitiveness with other exchanges.
Companies rely on the massive liquidity and access to investors that comes from being listed on the NYSE to grow and improve their business.
>> Next Steps: How to Buy Stocks
What Types of Stocks are Traded on the NYSE?
The NYSE represents almost every sector currently recognized in finance. Companies in energy, tech, industrial, biotechnology, and others are all represented on the NYSE, which is one of the reasons it maintains its crown as the largest.
Many companies have also been listed for over a century.
Not only are all sectors represented, but the NYSE also offers nearly every type of stock investors might be searching for.
This includessmall, mid, and large-cap stocks,growth stocks, dividend stocks, etc.
What Are Some Examples of Companies Listed on the NYSE?
While there are literally hundreds of companies listed on the NYSE, here are a few of the biggest names.
NYSE vs. NASDAQ: What’s the Difference?
- Listing Fees: The NYSE requires an application fee of $25,000 in addition to $0.004 per share, which equates to $4,400 for the minimum 1.1 million shares. The Nasdaq fees are quite a bit higher and depend on which tier – companies on the Nasdaq Capital Market have a minimum annual fee of $44,000 and $50,000 application fee, among others.
- Exchange Systems: the NYSE offered both electronic trading and in-person trading, though the Nasdaq is and always has been all-electronic. During the Covid-19 lockdowns, the NYSE was all-digital.
- Different Market Types (Auction & Dealer’s): The Nasdaq uses a dealer market; an entity operating as a dealer sets bid and asks prices and constantly updates them throughout the trading day. The NYSE is an auction market, which is where buyers’ and sellers’ prices must match up, at which point the price is set.
- Different Sectors and Industries: Companies listed on the NYSE represent nearly every sector of the economy from both domestic and international companies. By contrast, Nasdaq grew primarily by listing up-and-coming companies that have mostly been tech companies during the last 50 years. For this reason, the Nasdaq tends to correlate closely with the tech sector.
>> Learn More:NYSE vs. NASDAQ
Is the NYSE Safe for Investors?
The NYSE is the largest stock exchange on the planet by a not-insignificant margin.
Over the years, the NYSE company has updated its capacity to continue offering traders and investors access to shares with the highest levels of security possible.
If you buy and sell any stocks, it is extremely hard to avoid a company listed on the NYSE, but new investors can rest assured that the NYSE is safe.
>> Learn More:How to Research Stocks
Bottom Line: What Is the NYSE?
The Amsterdam stock exchange is the oldest exchange globally since it was on that exchange that the first stock ever traded – the Dutch East India Company – changed hands in 1602.
However, the NYSE is now the largest stock exchange globally and has its own colorful history that started in 1792.
Now, after 229 years, the NYSE continues to offer investors a safe way to buy and sell shares in companies to support their investment portfolios.
While investment is important, the exchange is primarily a service for companies to list their stock and raise capital faster than ever in history and grow their business.
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