Global markets overview (Part I)

Global markets overview (Part I)

The New York Stock Exchange (NYSE), also known as the “Big Board” is an American stock exchange located in New York, United States of America. Ideally, it is the world largest stock exchange in terms of market capitalization of the listed companies. The average daily trading value was evaluated at $169 billion by 2013. NYSE trading floor comprises of four rooms that are being used for trading purposes. The NYSE is part of intercontinental exchange, a holding company that is also listed in the bourse. NYSE was previously part of NYSE Euronext (NYX), which came into place in 2007 following the merger with Eronext. NYSE is open from Monday to Friday from 9.30 am to 4.00 pm. However, it remains closed during holidays that are usually declared by the Exchange well in advance. A trader carries out stock transactions on behalf of their clients. Ideally, the traders gather around desired posts mostly manned by specialized broker employed by NYSE member firm. Such specialized brokers act as auctioneers in open outcry market and brings both buyers and sellers together. In addition, they facilitate trade dissemination information to the participants, hence bringing buyers and sellers together. The auction process was automated in 1995 and now traders use wireless hand held computers. As such, traders can now execute transactions electronically through wireless transmission. Sellers send orders for prompt electronic execution or can even route orders to the floor for trade at the auction market.

To safeguard the electronic trading environment, NYSE works together with regulators such as Securities and Exchange Commission (SEC) to mitigate risks by implementing mechanisms such as liquidity replenishment and circuit breakers. In the mid-1960’s, the NYSE composite Index was created with a base value of 50 points. This reflected value of all stocks trading in the stock exchange rather than the thirty stocks that were included in Dow Jones Industrial Average. Further, NYSE set a new base value of five thousand points in 2003. Notably, NYSE and Deutsche Borse had agreed to merge and form a new company and Deutsche shareholders were to own 60% of the new entity whereas NYSE shareholders own the rest 40%. Despite the preliminary agreement, this deal was cancelled by commissioner Joaquim Almunia, after he had found out that the deal would have led to a monopoly in European financial derivatives. Therefore, it was later agreed that both NYSE and Deutsche Bourse would sell their derivatives separately.

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