What is the NYSE?
The New York Stock Exchange is a financial market located at 11 Wall Street in New York City. The NYSE is the world’s largest stock market based on market capitalization ($13.9 trillion) of its listed companies. The average daily trading value on the New York Stock Exchange is estimated at roughly 153 Billion American dollars.
The New York Stock Exchange provides a tangible location where buyers and sellers come together to trade shares of stock in public companies that are registered by the Securities and Exchange Commission.
The New York Stock Exchange is open for trading Monday through Friday between the hours of 9:30 AM to 4:00 PM Easter Standard. With the exception of holidays declared by the Exchange, the market is open on every work day of a given fiscal year.
The trading floor of the New York Stock Exchange maintains a continuous auction format, where traders execute stock transactions on behalf of investors. Traders on the floor will gather around selected posts where a specialist broker (employed by an NYSE member firm) will act as an auctioneer in an outcry market environment. This setting effectively brings buyers and sellers together to facilitate and manage the actual auction for the transfer of stocks and commodities.
As a result of the advancements of computer technologies, the auction process transformed into an automated format in 1995; traders utilize wireless hand held computers to execute trades between parties. This system enabled traders to execute and receive orders via wireless transmission; a format that expedited the exchange of securities.
The right to trade shares on the NYSE is conferred upon owners of the limited 1366 seats on the floor. Each seat has a determined price; however, the NYSE also offers one-years licenses to conduct direct transactions on the exchange.
The NYSE contains four rooms used for the facilitation of trading; each room is organized based on the market and the securities that are being transacted. The traders on the floor represent a company who profits through the exchange of equities such as stocks and commodities. That being said, traders also may commit their own capital to execute a trade and through a matter of course they can disseminate information to the crowd to further bring buyers and sellers together.
NYSE Composite Index
The NYSE Composite Index was created in the mid-1960s to reflect the value of all stocks traded at the exchange. This index was developed to expand the Dow Jones Industrial Average which consists of just 30 stocks that hold a significant market share in various sectors. Although these indexes are primarily used as information-based targeting points, they may be purchased as a stock themselves.
When an individual investor purchases the NYSE Composite Index or the Dow Jones Industrial Average they effectively assume partial ownership of the underlying companies that comprise the particular indexes. As a result of the companies within the indexes, a buyer believes that the overall value of the market will increase.