The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange located at 11 Wall Street, Lower Manhattan, New York City, New York. It is by far the world's largest stock exchange by market capitalization of its listed companies at US$30.1 trillion as of February 2018. The average daily trading value was approximately 169 billion in 2013. The NYSE trading floor is located at 11 Wall Street and is composed of 21 rooms used for the facilitation of trading. A fifth trading room, located at 30 Broad Street, was closed in February 2007. The main building and the 11 Wall Street building were designated National Historic Landmarks in 1978.
The NYSE is owned by Intercontinental Exchange, an American holding company that it also lists . Previously, it was part of NYSE Euronext (NYX), which was formed by the NYSE's 2007 merger with Euronext.
The floor of the New York Stock Exchange in 1908
The earliest recorded organization of securities trading in New York among brokers directly dealing with each other can be traced to the Buttonwood Agreement. Previously, securities exchange had been intermediated by the auctioneers, who also conducted more mundane auctions of commodities such as wheat and tobacco. On May 17, 1792, twenty four brokers signed the Buttonwood Agreement, which set a floor commission rate charged to clients and bound the signers to give preference to the other signers in securities sales. The earliest securities traded were mostly governmental securities such as War Bonds from the Revolutionary War and First Bank of the United States stock, although Bank of New York stock was a non-governmental security traded in the early days. The Bank of North America, along with the First Bank of the United States and the Bank of New York, were the first shares traded on the New York Stock Exchange.
In 1817, the stockbrokers of New York, operating under the Buttonwood Agreement, instituted new reforms and reorganized. After sending a delegation to Philadelphia to observe the organization of their board of brokers, restrictions on manipulative trading were adopted, as well as formal organs of governance. After re-forming as the New York Stock and Exchange Board, the broker organization began renting out space exclusively for securities trading, which previously had been taking place at the Tontine Coffee House. Several locations were used between 1817 and 1865, when the present location was adopted.
The invention of the electrical telegraph consolidated markets and New York's market rose to dominance over Philadelphia after weathering some market panics better than other alternatives. The Open Board of Stock Brokers was established in 1864 as a competitor to the NYSE. With 354 members, the Open Board of Stock Brokers rivaled the NYSE in membership (which had 533) "because it used a more modern, continuous trading system superior to the NYSE’s twice-daily call sessions". The Open Board of Stock Brokers merged with the NYSE in 1869. Robert Wright of Bloomberg writes that the merger increased the NYSE's members as well as trading volume, as "several dozen regional exchanges were also competing with the NYSE for customers. Buyers, sellers and dealers all wanted to complete transactions as quickly and cheaply as technologically possible and that meant finding the markets with the most trading, or the greatest liquidity in today’s parlance. Minimizing competition was essential to keep a large number of orders flowing, and the merger helped the NYSE maintain its reputation for providing superior liquidity." The Civil War greatly stimulated speculative securities trading in New York. By 1869, membership had to be capped, and has been sporadically increased since. The latter half of the nineteenth century saw rapid growth in securities trading.
Securities trade in the latter nineteenth and early twentieth centuries was prone to panics and crashes. Government regulation of securities trading was eventually seen as necessary, with arguably the most dramatic changes occurring in the 1930s after a major stock market crash precipitated the Great Depression.
The Stock Exchange Luncheon Club was situated on the seventh floor from 1898 until its closure in 2006.
The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978, as was the 11 Wall Street building.
On April 21, 2005, the NYSE announced its plans to merge with Archipelago in a deal intended to reorganize the NYSE as a publicly traded company. NYSE's governing board voted to merge with rival Archipelago on December 6, 2005, and became a for-profit, public company. It began trading under the name NYSE Group on March 8, 2006. On April 4, 2007, the NYSE Group completed its merger with Euronext, the European combined stock market, thus forming NYSE Euronext, the first transatlantic stock exchange.
Wall Street is the leading US money center for international financial activities and the foremost US location for the conduct of wholesale financial services. "It comprises a matrix of wholesale financial sectors, financial markets, financial institutions, and financial industry firms" (Robert, 2002). The principal sectors are securities industry, commercial banking, asset management, and insurance.
Prior to the acquisition of NYSE Euronext by the ICE in 2013, Marsh Carter was the Chairman of the NYSE and the CEO was Duncan Niederauer. Currently, the chairman is Jeffrey Sprecher. In 2016, NYSE owner Intercontinental Exchange Inc. earned $419 million in listings-related revenues.
NYSE's stock exchange traders floor before the introduction of electronic readouts and computer screens.
The exchange was closed shortly after the beginning of World War I (July 31, 1914), but it partially re-opened on November 28 of that year in order to help the war effort by trading bonds, and completely reopened for stock trading in mid-December.
On September 16, 1920, a bomb exploded on Wall Street outside the NYSE building, killing 33 people and injuring more than 400. The perpetrators were never found. The NYSE building and some buildings nearby, such as the JP Morgan building, still have marks on their façades caused by the bombing.
The Black Thursday crash of the Exchange on October 24, 1929, and the sell-off panic which started on Black Tuesday, October 29, are often blamed for precipitating the Great Depression. In an effort to restore investor confidence, the Exchange unveiled a fifteen-point program aimed to upgrade protection for the investing public on October 31, 1938.
On October 1, 1934, the exchange was registered as a national securities exchange with the U.S. Securities and Exchange Commission, with a president and a thirty-three-member board. On February 18, 1971, the non-profit corporation was formed, and the number of board members was reduced to twenty-five.
One of Abbie Hoffman's well-known publicity stunts took place in 1967, when he led members of the Yippie movement to the Exchange's gallery. The provocateurs hurled fistfuls of dollars toward the trading floor below. Some traders booed, and some laughed and waved. Three months later the stock exchange enclosed the gallery with bulletproof glass. Hoffman wrote a decade later, "We didn't call the press; at that time we really had no notion of anything called a media event."Abbie Hoffman, Soon to be a Major Motion Picture, p. 100, Putnam, 1980.
On October 19, 1987, the Dow Jones Industrial Average (DJIA) dropped 508 points, a 22.6% loss in a single day, the second-biggest one-day drop the exchange had experienced. Black Monday was followed by Terrible Tuesday, a day in which the Exchange's systems did not perform well and some people had difficulty completing their trades.
Subsequently, there was another major drop for the Dow on October 13, 1989—the Mini-Crash of 1989. The crash was apparently caused by a reaction to a news story of a $6.75 billion leveraged buyout deal for UAL Corporation, the parent company of United Airlines, which broke down. When the UAL deal fell through, it helped trigger the collapse of the junk bond market causing the Dow to fall 190.58 points, or 6.91 percent.
Similarly, there was a panic in the financial world during the year of 1997; the Asian Financial Crisis. Like the fall of many foreign markets, the Dow suffered a 7.18% drop in value (554.26 points) on October 27, 1997, in what later became known as the 1997 Mini-Crash but from which the DJIA recovered quickly. This was the first time that the "circuit breaker" rule had operated.
On January 26, 2000, an altercation during filming of the music video for Rage Against the Machine's "Sleep Now in the Fire", directed by Michael Moore, caused the doors of the exchange to be closed and the band to be escorted from the site by security after the members attempted to gain entry into the exchange.
In the aftermath of the September 11 attacks, the NYSE was closed for four trading sessions, resuming on Monday, September 17, one of the rare times the NYSE was closed for more than one session and only the third time since March 1933. On the first day, the NYSE suffered a 7.1% drop in value (684 points); after a week, it dropped by 14% (1370 points). An estimated of $1.4 trillion was lost within five days of trading. The NYSE was only 5 blocks from Ground Zero.
On May 6, 2010, the Dow Jones Industrial Average posted its largest intraday percentage drop since the crash on October 19, 1987, with a 998-point loss later being called the 2010 Flash Crash (as the drop occurred in minutes before rebounding). The SEC and CFTC published a report on the event, although it did not come to a conclusion as to the cause. The regulators found no evidence that the fall was caused by erroneous ("fat finger") orders.
On October 29, 2012, the stock exchange was shut down for two days due to Hurricane Sandy. The last time the stock exchange was closed due to weather for a full two days was on March 12 and 13, 1888.
On May 1, 2014, the stock exchange was fined $4.5 million by the Securities and Exchange Commission to settle charges that it had violated market rules.
On August 14, 2014, Berkshire Hathaway's A Class shares, the highest priced shares on the NYSE, hit $200,000 a share for the first time.
On July 8, 2015, technical issues affected the stock exchange, halting trading at 11:32 am ET. The NYSE reassured stock traders that the outage was "not a result of a cyber breach", and the Department of Homeland Security confirmed that there was "no sign of malicious activity". Trading eventually resumed at 3:10 pm ET the same day.
On May 25, 2018, Stacey Cunningham, the NYSE's chief operating officer, became the Big Board's 67th president, succeeding Thomas Farley. She is the first female leader in the exchange's 226-year history.
The NYSE plans to temporarily move to all-electronic trading on March 23, 2020, due to the 2020 coronavirus pandemic in the United States.New York Stock Exchange To Shift To All-Electronic Trading
The New York Stock Exchange is closed on New Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving, and Christmas. When those holidays occur on a weekend, the holiday is observed on the closest weekday. In addition, the Stock Exchange closes early on the day before Independence Day, the day after Thanksgiving, and the day before Christmas. The NYSE averages about 253 trading days per year.
The NYSE trading floor in 2009
The New York Stock Exchange (sometimes referred to as "the Big Board") provides a means for buyers and sellers to trade shares of stock in companies registered for public trading. The NYSE is open for trading Monday through Friday from 9:30 am – 4:00 pm ET, with the exception of holidays declared by the Exchange in advance.
The NYSE trades in a continuous auction format, where traders can execute stock transactions on behalf of investors. They will gather around the appropriate post where a specialist broker, who is employed by a NYSE member firm (that is, he/she is not an employee of the New York Stock Exchange), acts as an auctioneer in an open outcry auction market environment to bring buyers and sellers together and to manage the actual auction. They do on occasion (approximately 10% of the time) facilitate the trades by committing their own capital and as a matter of course disseminate information to the crowd that helps to bring buyers and sellers together. The auction process moved toward automation in 1995 through the use of wireless hand held computers (HHC). The system enabled traders to receive and execute orders electronically via wireless transmission. On September 25, 1995, NYSE member Michael Einersen, who designed and developed this system, executed 1000 shares of IBM through this HHC ending a 203-year process of paper transactions and ushering in an era of automated trading.
As of January 24, 2007, all NYSE stocks can be traded via its electronic hybrid market (except for a small group of very high-priced stocks). Customers can now send orders for immediate electronic execution, or route orders to the floor for trade in the auction market. In the first three months of 2007, in excess of 82% of all order volume was delivered to the floor electronically.
NYSE works with US regulators such as the SEC and CFTC to coordinate risk management measures in the electronic trading environment through the implementation of mechanisms like circuit breakers and liquidity replenishment points.
Until 2005, the right to directly trade shares on the exchange was conferred upon owners of the 1,366 "seats". The term comes from the fact that up until the 1870s NYSE members sat in chairs to trade. In 1868, the number of seats was fixed at 533, and this number was increased several times over the years. In 1953, the number of seats was set at 1,366. These seats were a sought-after commodity as they conferred the ability to directly trade stock on the NYSE, and seat holders were commonly referred to as members of the NYSE. The Barnes family is the only known lineage to have five generations of NYSE members: Winthrop H. Barnes (admitted 1894), Richard W.P. Barnes (admitted 1926), Richard S. Barnes (admitted 1951), Robert H. Barnes (admitted 1972), Derek J. Barnes (admitted 2003). Seat prices varied widely over the years, generally falling during recessions and rising during economic expansions. The most expensive inflation-adjusted seat was sold in 1929 for $625,000, which, today, would be over six million dollars. In recent times, seats have sold for as high as $4 million in the late 1990s and as low as $1 million in 2001. In 2005, seat prices shot up to $3.25 million as the exchange entered into an agreement to merge with Archipelago and became a for-profit, publicly traded company. Seat owners received $500,000 in cash per seat and 77,000 shares of the newly formed corporation. The NYSE now sells one-year licenses to trade directly on the exchange. Licenses for floor trading are available for $40,000 and a license for bond trading is available for as little as $1,000 as of 2010. Neither are resell-able, but may be transferable during a change of ownership of a corporation holding a trading license.
Following the Black Monday market crash in 1987, NYSE imposed trading curbs to reduce market volatility and massive panic sell-offs. Following the 2011 rule change, at the start of each trading day, the NYSE sets three circuit breaker levels at levels of 7% (Level 1), 13% (Level 2), and 20% (Level 3) of the average closing price of the S&P 500 for the preceding trading day. Level 1 and Level 2 declines result in a 15-minute trading halt unless they occur after 3:25 pm, when no trading halts apply. A Level 3 decline results in trading being suspended for the remainder of the day. (The biggest one-day decline in the S&P 500 since 1987 was the 11.98% drop on March 16, 2020.)
NYSE Composite Index
In the mid-1960s, the NYSE Composite Index (NYSE: NYA) was created, with a base value of 50 points equal to the 1965 yearly close. This was done to reflect the value of all stocks trading at the exchange instead of just the 30 stocks included in the Dow Jones Industrial Average. To raise the profile of the composite index, in 2003, the NYSE set its new base value of 5,000 points equal to the 2002 yearly close. Its close at the end of 2013 was 10,400.32.
The NYSE at Christmas time (December 2008)
- In 1792, NYSE acquires its first traded securities.
- In 1817, the constitution of the New York Stock and Exchange Board is adopted. It had also been established by the New York brokers as a formal organization.
- In 1863, Name changed to the New York Stock Exchange.
- In 1865, New York Gold Exchange was acquired by the NYSE.George Winslow, "New York Gold Market" in The Encyclopedia of New York City (2d ed.: eds. Kenneth T. Jackson, Lisa Keller & Nancy Flood).
- In 1867, Stock tickers were first introduced.
- In 1885, the 400 NYSE members in the Consolidated Stock Exchange withdraw from Consolidated over disagreements on exchange trade areas.
- In 1896, the Dow Jones Industrial Average (DJIA) is first published in The Wall Street Journal.
- In 1903, NYSE moves into new quarters at 18 Broad Street.
- In 1906, the DJIA exceeds 100 on January 12.
- In 1907, Panic of 1907.
- In 1909, Trading in bonds.
- In 1915, Basis of quoting and trading in stocks changed from % of par value to dollars.
- In 1920, a bomb exploded on Wall Street outside the NYSE building. Thirty killed and over 100 injured.
- In 1923, Poor's Publishing introduced their "Composite Index", today referred to as the S&P 500, which tracked a small number of companies on the NYSE.
- In 1929, the central quote system was established; Black Thursday, October 24 and Black Tuesday, October 29 signal the end of the Roaring Twenties bull market.
- In 1938, NYSE names its first president.
- In 1943, trading floor is opened to women.NYSE: Timeline "
- In 1949, the third longest (eight-year) bull market begins.
- In 1954, the DJIA surpasses its 1929 peak in inflation-adjusted dollars.
- In 1956, the DJIA closes above 500 for the first time on March 12.
- In 1957, after Poor's Publishing merged with the Standard Statistics Bureau, the Standard & Poors composite index grew to track 500 companies on the NYSE, becoming known as the S&P 500.
- In 1966, NYSE begins a composite index of all listed common stocks. This is referred to as the "Common Stock Index" and is transmitted daily. The starting point of the index is 50. It is later renamed the NYSE Composite Index.
- In 1967, Muriel Siebert becomes the first female member of the New York Stock Exchange.
- In 1967, protesters led by Abbie Hoffman throw mostly fake dollar bills at traders from gallery, leading to the installation of bullet-proof glass.
- In 1970, the Securities Investor Protection Corporation was established.
- In 1971, NYSE incorporated and recognized as Not-for-Profit organization.
- In 1971, the Nasdaq was founded and competes with the NYSE as the world's first electronic stock market. To date, the Nasdaq is the second-largest exchange in the world by market capitalization, behind only the NYSE.
- In 1972, the DJIA closes above 1,000 for the first time on November 14.
- In 1977, foreign brokers are admitted to NYSE.
- In 1980, the New York Futures Exchange was established.
- In 1987, Black Monday, October 19, sees the second-largest one-day DJIA percentage drop (22.6%, or 508 points) in history.
- In 1987, Membership in the NYSE reaches a record price of $1.5 million.
- In 1990, the longest (ten-year) bull market begins.
- In 1991, the DJIA exceeds 3,000.
- In 1995, the DJIA exceeds 5,000.
- In 1996, real-time ticker introduced.
- In 1997, on October 27, a sell-off in Asia's stock markets hurts the U.S. markets as well; DJIA sees the largest one-day point drop of 554 (or 7.18%) in history.
- In 1999, the DJIA exceeds 10,000 on March 29.
- In 2000, the DJIA peaks at 11,722.98 on January 14; first NYSE global index is launched under the ticker NYIID.
- In 2001, trading in fractions ends, replaced by decimals (increments of $0.01, see Decimalization); September 11 attacks occur causing NYSE to close for four sessions.
- In 2003, NYSE Composite Index relaunched and value set equal to 5,000 points.
- In 2006, NYSE and ArcaEx merge, creating NYSE Arca and forming the publicly owned, for-profit NYSE Group, Inc.; in turn, NYSE Group merges with Euronext, creating the first trans-Atlantic stock exchange group; DJIA tops 12,000 on October 19.
- In 2007, US President George W. Bush shows up unannounced to the Floor about an hour and a half before a Federal Open Market Committee interest-rate decision on January 31; NYSE announces its merger with the American Stock Exchange; NYSE Composite closes above 10,000 on June 1; DJIA exceeds 14,000 on July 19 and closes at a peak of 14,164.53 on October 9.
- In 2008, the DJIA loses more than 500 points on September 15 amid fears of bank failures, resulting in a permanent prohibition of naked short selling and a three-week temporary ban on all short selling of financial stocks; in spite of this, record volatility continues for the next two months, culminating at -year market lows.
- In 2009, the second longest and current bull market begins on March 9 after the DJIA closes at 6,547.05 reaching a 12-year low; DJIA returns to 10,015.86 on October 14.
- In 2013, the DJIA closes above 2007 highs on March 5; DJIA closes above 16,500 to end the year.
- In 2014, the DJIA closes above 17,000 on July 3 and above 18,000 on December 23.
- In 2015, the DJIA achieved an all-time high of 18,351.36 on 19 May.
- In 2015, the DJIA dropped over 1,000 points to 15,370.33 soon after open on August 24, 2015, before bouncing back and closing at 15,795.72, a drop of over 669 points.
- In 2016, the DJIA hits an all-time high of 18,873.6.
- In 2017, the DJIA reaches 20,000 for the first time (on January 25).
- In 2018, the DJIA reaches 25,000 for the first time (on January 4). On February 5, the DJIA dropped 1,175 points, making it the largest point drop in history.
Merger, acquisition, and control
In October 2008, NYSE Euronext completed acquisition of the American Stock Exchange (AMEX) for $260 million in stock.
On February 15, 2011, NYSE and Deutsche Börse announced their merger to form a new company, as yet unnamed, wherein Deutsche Börse shareholders would have 60% ownership of the new entity, and NYSE Euronext shareholders would have 40%.
On February 1, 2012, the European Commission blocked the merger of NYSE with Deutsche Börse, after commissioner Joaquín Almunia stated that the merger "would have led to a near-monopoly in European financial derivatives worldwide". Instead, Deutsche Börse and NYSE would have to sell either their Eurex derivatives or LIFFE shares in order to not create a monopoly. On February 2, 2012, NYSE Euronext and Deutsche Börse agreed to scrap the merger.
In April 2011, Intercontinental Exchange (ICE), an American futures exchange, and NASDAQ OMX Group had together made an unsolicited proposal to buy NYSE Euronext for approximately, a deal in which NASDAQ would have taken control of the stock exchanges. NYSE Euronext rejected this offer twice, but it was finally terminated after the United States Department of Justice indicated their intention to block the deal due to antitrust concerns.
In December 2012, ICE had proposed to buy NYSE Euronext in a stock swap with a valuation of $8 billion. NYSE Euronext shareholders would receive either $33.12 in cash, or $11.27 in cash and approximately a sixth of a share of ICE. Jeffrey Sprecher, the chairman and CEO of ICE, will retain those positions, but four members of the NYSE board of directors will be added to the ICE board.
Opening and closing bells
U.S. Secretary of Commerce Donald L. Evans rings the opening bell at the NYSE on April 23, 2003. Former chairman Jack Womack is also in this picture.
The NYSE's opening and closing bells mark the beginning and the end of each trading day. The opening bell is rung at 9:30 am ET to mark the start of the day's trading session. At 4 pm ET the closing bell is rung and trading for the day stops. There are bells located in each of the four main sections of the NYSE that all ring at the same time once a button is pressed. There are three buttons that control the bells, located on the control panel behind the podium which overlooks the trading floor. The main bell, which is rung at the beginning and end of the trading day, is controlled by a green button. The second button, colored orange, activates a single-stroke bell that is used to signal a moment of silence. A third, red button controls a backup bell which is used in case the main bell fails to ring.
The signal to start and stop trading was not always a bell. The original signal was a gavel (which is still in use today along with the bell), but during the late 1800s, the NYSE decided to switch the gavel for a gong to signal the day's beginning and end. After the NYSE changed to its present location at 18 Broad Street in 1903, the gong was switched to the bell format that is currently being used.
A common sight today is the highly publicized events in which a celebrity or executive from a corporation stands behind the NYSE podium and pushes the button that signals the bells to ring. Due to the amount of coverage that the opening/closing bells receive, many companies coordinate new product launches and other marketing-related events to start on the same day as when the company's representatives ring the bell. It was only in 1995 that the NYSE began having special guests ring the bells on a regular basis; prior to that, ringing the bells was usually the responsibility of the exchange's floor managers.
Many of the people who ring the bell are business executives whose companies trade on the exchange. However, there have also been many famous people from outside the world of business that have rung the bell. Athletes such as Joe DiMaggio of the New York Yankees and Olympic swimming champion Michael Phelps, entertainers such as rapper Snoop Dogg, members of ESPN’s College GameDay crew, singer and actress Liza Minnelli and members of the band Kiss, and politicians such as Mayor of New York City Rudy Giuliani and President of South Africa Nelson Mandela have all had the honor of ringing the bell. Two United Nations Secretaries General have also rung the bell. On April 27, 2006, Secretary-General Kofi Annan rang the opening bell to launch the United Nations Principles for Responsible Investment. On July 24, 2013, Secretary-General Ban Ki-moon rang the closing bell to celebrate the NYSE joining the United Nations Sustainable Stock Exchanges Initiative.
In addition, there have been many bell-ringers who are famous for heroic deeds, such as members of the New York police and fire departments following the events of 9/11, members of the United States Armed Forces serving overseas, and participants in various charitable organizations.
There have also been several fictional characters that have rung the bell, including Mickey Mouse, the Pink Panther, Mr. Potato Head, the Aflac Duck, Gene of The Emoji Movie, and Darth Vader.