The New York Stock Exchange (NYSE), nicknamed the Big Board, is the oldest and largest stock exchange in the United States, and the largest stock exchange in the world by dollar volume.
The New York Stock Exchange (NYSE) is a platform for buyers and sellers to trade shares of stock in publicly registered companies. Trading on this exchange is conducted in bonds and stocks as well as financial futures and options. Generally, to be listed on the NYSE, a company must submit a title; descriptions of its properties; a statement of its status under the Federal Securities Act; a list of any companies with which it is affiliated; details of its management, dividend records, capitalization, and conversion rights; information about labor relations and any pending legal matters; and its financial statements, including its debt and policies of account keeping.
The NYSE is divided into “seats.” Originally, the number of seats increased or decreased as members joined or resigned. In 1868, the number of seats was fixed at 533, but in 1953, this number was extended to 1,366 seats. Owning a seat enables a person to trade on the floor of the exchange, either for that individual’s personal account (floor trader) or as an agent for someone else (floor broker).
The New York Stock Exchange originated on May 17, 1792, when twenty-four New York city stockbrokers and merchants signed the Buttonwood Agreement outside 68 Wall Street under a buttonwood tree. By this two-sentence agreement, they promised to trade only with each other and abide by a 0.25 percent commission. Thus, three government bonds and two bank stocks began to be traded.
On March 8, 1817, the Buttonwood Agreement was drafted into a constitution, by which the organization was renamed the New York Stock and Exchange Board. With Anthony Stockholm as its first president, the exchange raised the trading level to thirty stocks. That same year, the exchange moved to bigger premises at 40 Wall Street. In 1863, the name of the organization was shortened to its current form, the New York Stock Exchange.
From the establishment of the NYSE until 1871, trading on the exchange was done in a “call market” fashion, a system by which only one company’s stock trades across the whole exchange at any one time. The members would sit in their seats and participate in the buying and selling of desired stocks as if they were at an auction. After 1871, the trading of stocks became simultaneous, and floor trading became the norm. Prices for seats on the exchange are determined by supply and demand, and they have ranged from $500,000 during the mid-1930’s to $4 million during the early 1990’s.
The first half of the twentieth century was marked by not only innovations but also struggles. The NYSE was not immune to the ravages of warfare. It closed at the beginning of World War I (July, 1914); however, it reopened on November 28 of that same year, in an effort to boost the economy by trading bonds. On September 16, 1920, a bomb exploded outside the NYSE, killing thirty-three people and injuring more than four hundred. The bombers were never found. In 1929, the Great Depression was precipitated, if not caused, by the
On October 1, 1934, the NYSE was registered as a national securities exchange with the U.S. Securities and Exchange Commission. The organization consisted of a president and thirty-three board members. To help the economy and bolster investor confidence in the markets, the NYSE created an investor protection program on October 31, 1938.
In 1966, the exchange created the
On February 18, 1971, the NYSE was first incorporated as a not-for-profit corporation, and the number of board members was reduced to twenty-five.
The NYSE was first located outside 68 Wall Street, by a buttonwood tree, and when the weather was inclement, at the Tontine Coffee House. In 1812, the exchange moved to its first permanent home, a rented room at 40 Wall Street.
In 1903, the NYSE moved to 18 Broad Street. The exchange commissioned the construction of the building to architect George B. Post. The neoclassic building was ornamented with a pediment designed by John Quincy Adams Ward, a prolific American sculptor. The figures in the pediment represent American commerce. The central figure symbolizes integrity, flanked by figures personifying sources of wealth: agriculture and mining to the left, and science and industry and invention to the right. The building is considered one of Post’s masterpieces, and it is a New York and national landmark.
The last two decades of the twentieth century and first of the twenty-first were full of distress and controversy. On Black Monday, October 19, 1987, the world
In September, 2003, the news of its chair, Richard Grasso, receiving $140 million in a deferred compensation package shocked NYSE shareholders. Grasso was subsequently replaced by John S. Reed, former chair of Citigroup.
In 2005, the NYSE launched an initiative to reorganize itself to become a publicly traded company. On December 6, it acquired Archipelago Holdings, which operates an open all-electronic stock market in the United States. The newly publicly traded company was renamed the NYSE Group on March 8, 2006.
In August of 2006, NYSE chief executive officer John Thain made public his plan to create a blended electronic and floor-based auction market. Chief Technology Officer Roger Burkhardt was commissioned to create this hybrid market. The NYSE had been keeping up with technological innovations; traders already had such tools as wireless handhelds, but under the new system, stocks could be traded as an immediate response to a customer’s electronic order. The NYSE hybrid market was launched on January 24, 2007.
On April 4, 2007, the NYSE merged with Euronext, the pan-European stock exchange, creating a truly global financial marketplace group and the world’s largest and most liquid exchange group. Jan-Michiel Hessels became chair, with Marshall N. Carter as the deputy chair. The
The NYSE has declared that its mission is to add value to the capital-raising and asset-management processes by providing a self-regulated marketplace for the trading of financial instruments, and to serve as a forum for discussion of relevant national and international policy issues.
Buck, James E. The New York Stock Exchange: Another Century. Old Saybrook, Conn.: Greenwich, 1999. Limited revised edition containing the history of the NYSE up to 1999, illustrated with more than 250 photographs of the trading floor. Gasparino, Charles. King of the Club: Richard Grasso and the Survival of the New York Stock Exchange. New York: Collins, 2007. Well-documented reconstruction of the events that led to the rise and fall of New York Stock Exchange chair Richard Grasso. The author uses the scandal to offer the reader a look inside the boardroom and at the technological changes initiated at the NYSE during the 1990’s. McPherson, Aaron. NYSE and Euronext: The Crow Tastes Pretty Good Here! Framingham, Mass.: IDC Research, 2007. In-depth review of all the causes, financial terms, and consequences of the merger of the NYSE and Euronext. Noble, Henry George Stebbins. The New York Stock Exchange in the Crisis of 1914. Detroit: University of Michigan Library, 2005. Detailed examination of the first time that the NYSE was forced to close its doors; essential to understand the effects of World War I in the United States and the role of the NYSE. Sobel, Robert. The Big Board: A History of the New York Stock Market. Knoxville, Tenn.: Beard Books, 2000. An insightful short account of Wall Street and of American economic growth from the eighteenth century to 1965. Weiner, Eric J. What Goes Up: The Uncensored History of Modern Wall Street as Told by the Bankers, Brokers, CEOs, and Scoundrels Who Made It Happen. Newport Beach, Calif.: Back Bay Books, 2007. Weiner, a former Wall Street journalist, offers the reader an insightful perspective based on primary sources, mostly interviews.
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