Course 102: The Stock Exchanges
The New York Stock Exchange
In this course
1 Introduction
2 The New York Stock Exchange
3 Nasdaq
4 The American Stock Exchange
5 Regional Exchanges
6 Over-the-Counter (OTC) Stocks

The oldest and most prestigious exchange in the United States (or indeed in the world) is the New York Stock Exchange (NYSE, also known as the "Big Board"), at Broad and Wall Streets near the southern tip of Manhattan. The NYSE traces its beginnings to 1792, when 24 brokers, under a buttonwood tree on Wall Street, signed an agreement to trade securities on a commission basis. One of the first two stocks listed on the NYSE was the Bank of New York BK, which is still traded there. In 1817 the Exchange wrote its first constitution, and in 1903 it moved into its present home at 18 Broad Street.

Trading on the New York Stock Exchange is done on a large trading floor. Orders to buy and sell specific stocks come into brokerage firms that are members of the Exchange, and these firms transmit the orders to floor brokers. A floor broker goes to a designated place on the floor where a specific stock trades (known as a trading post) and executes the order with another broker who specializes in trading that stock. Prices are determined through supply and demand. Once the deal is made, the price and amount are transmitted back to the brokerage firm, which then notifies the person who placed the order.

In order to be listed on the New York Stock Exchange, a company has to meet a rigorous set of standards. Among those standards, its stock has to be worth at least $60 million and the company has to have had at least $2 million in earnings for each of the past two years. There are also cash flow requirements and standards involving minimum number of shareholders and shareholder rights. Companies that cannot meet all the standards can be admitted on a case-by-case basis, but they generally have to be substantially bigger and more established companies to do so.

Even with all this, a company still has to get the stamp of approval of the Exchange, which wants to ensure that the companies it lists are stable. Once it gets approval, the company is assigned a ticker symbol of one to three letters, which is used as its unique identifier in making trades.

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