NYSE - Probably Main Stock Market
An exchange is a platform where market participants can buy and sell securities and commodities. One of the oldest and largest stock exchanges in the US is the New York Stock Exchange (NYSE). Opened in 1792.
Today, the daily turnover reaches billions of USD, and the total capitalization of securities exceeds USD 27 trillion. Some calculations say that over 65% of all stock trading takes place on the NYSE.
Today we propose to find out some interesting facts from the history of the stock market and discuss why traders around the world keep a close eye on their activity.
How did the NYSE come about?
The history of the NYSE began with the signing of the Bretton Woods Agreement whereby 24 brokers formed an investment company with only 2 rules to follow. They just need to trade among themselves and pay a small fee for each of those trades.
The first type of office is a coffee shop called Tontine Coffee House. There they traded stocks, but only by barter. 25 years later, the community decided to let other players into their business. All trades go to the exchange, that's how it works today.
The most important facts in NYSE history
In the spring of 1817, the New York Stock Exchange and its internal stock exchange board elected Anthony Stockholm as president of the organization. Every morning he opens a trade and shows a list of stocks available for buying and selling: I want to remind you that initially only five companies traded on the stock exchange.
A new stage of development began in 1837 with the invention of the telegraph. Realtors quickly grasped the idea and pulled telegraph lines wherever they could. Its purpose is to facilitate instant exchange of information to make trading decisions faster.
The first exchange tickets appeared on the NYSE in 1867. An American Telegraph employee designed a special machine that issued a slip of paper explaining the trade. These papers are sent by managers to typewriters via pneumatic tubes, and they transmit the information to brokers. Only after this process investors receive a valid share price.
The first stock index – the Dow Jones Transportation Average – appeared in the summer of 1884. It includes 9 major transportation companies in the United States, and the index calculation was done by Dow Jones founder and Wall Street Journal editor Charles Dow. He used to be active in analyzing market behavior and designing the theories that form the basis of today's technological analysis.
During World War I, which began in 1914, the NYSE was closed. Foreign investors seek money for military purposes and massively sell their assets on the stock exchange. At that time, the Dow Jones index was down more than 12% and trading was closed to avoid another crash.
This is the longest shutdown in the history of the platform: lasting about 4 months. On the opening day, the index fell even lower. The shutdown didn't save the Index from falling, but we can only speculate how far it could fall.
This wasn't the major stock's last major drop: On October 19, 1987, the Dow Jones again lost more than 22%, and the day was nicknamed Black Monday.
The crash affected not only the stock market, but the entire financial system. To deal with this incident, the US Securities and Exchange Commission (SEC) has introduced certain rules to protect private investors.
New restrictions on securities trading emerged in 2008 when another crisis hit. The Dow Jones fell 5% on the risk of bankruptcy. The exchange stopped opening short trades for several weeks. However, after the open, the market remained too volatile and continued to fall.
How does the NYSE work?
Part of trading is done not only by computers, but also by people: up to 1,000 brokers work on the exchange every day. The way this hybrid works just hangs in there – everything runs automatically on other platforms. Trading is open on weekdays from 09:30 to 16:00.
An interesting tradition is the signal to close the trade: you ring the bell. It used to be a large gong used to notify brokers and dealers about starting work, but in 1903 it was replaced by an electronically controlled brass bell.
Ringing the bell on the NYSE has become a symbolic act. Representatives of companies just starting to trade on the NYSE have the honor of calling them.